FIRS, Lagos sign MoU to establish joint tax audit system

The Federal Inland Revenue Service (FIRS) has signed a memorandum of understanding (MoU) with Lagos to establish a joint tax audit system.

Speaking on Monday during the signing of the MoU, Babajide Sanwo-Olu, Lagos governor, said the initiative would address duplication of efforts and facilitate exchange of data that are relevant to enforcement of extant tax laws.

Sanwo-Olu described the collaboration as “epoch-making”, saying the conversation for the harmonisation of the two agencies’ mandates started about a year ago.

In 2021, the federal government and Lagos clashed over the collection of value-added tax (VAT) in the state.

Sanwo-Olu signed into law a bill seeking to empower the state to collect value-added tax (VAT) — following the Rivers state’s VAT law.

The bill sought to empower the Lagos government to collect VAT in the state instead of (FIRS), an agent of the federal government.

Further commenting on the latest development, Sanwo-Olu said there is a need to forge a common front in widening the tax net to raise the country’s tax to gross domestic product (GDP) ratio.

He said Nigeria had maintained an unimpressive tax to GDP ratio of between 6 to 8 percent, despite the yearly record-breaking turnovers by both FIRS and the Lagos Internal Revenue Service (LIRS).

This, the politician said, has mounted pressure on the nation’s resources and created an imbalance in government’s expenditure.

“Studies have shown that there would be better service delivery to the citizens and improvement in efficiency of tax collection when the two agencies work together,” Sanwo-Olu said.

“The cost of tax collection would be reduced, we would see better customer satisfaction and more resources would be generated for the government to deliver more dividends of democracy.

“For us as a state, we are humbled by this collaborative effort and we believe our citizens will be the ultimate beneficiaries of this initiative.

“The MoU is in the best interest of the public, as it affirms the reason why we need to come together and strengthen the cordial working relationship between the two agencies.”

Also speaking, Muhammad Nami, FIRS chairman, said the MoU would help both agencies to build capacity in respective areas of specialisation.

He said it would also help Lagos and the federal government to raise revenue for projects and development programmes.

Also speaking, Ayo Subair, LIRS chairman, said the collaboration would bring about quick solutions to tax disputes and incidents.

Subair added that the partnership would reduce the cost of administration for both tax authorities and also eliminate the hiding places for recalcitrant taxable persons and entities.