LIRS Warns of Heavy Sanctions, Commences Employer Tax Compliance Enforcement
The Lagos State Internal Revenue Service (LIRS) has stepped up enforcement efforts against tax defaulters, warning employers of labour across the state to comply with mandatory annual tax filing requirements before the January 31 deadline or face statutory penalties, as Lagos intensifies measures to strengthen fiscal accountability.
The warning was issued on Thursday by the Director of Personal Income Tax at LIRS, Mr Ayodele Adebayo, during an interview in his office, as the agency flagged growing concerns over last-minute filings and incomplete submissions by employers.
Under the Nigeria Tax Administration Act (NTAA), 2025, employers are legally required to submit annual returns for all employees engaged in the preceding year, a process that Adebayo described as central to the integrity of the state’s tax administration system.
“January is a very critical month for tax compliance. What is due at this time are the employers’ annual returns, which require employers to file comprehensive details of all employees engaged in the course of the year,” he said.
The annual filing obligation covers employees currently in service as well as those who may have exited during the year. Employers are required to submit their Pay As You Earn (PAYE) schedules, including details of employee earnings, taxes deducted and remitted, alongside monthly returns for tax deductions at source in line with Section 28 of the NTAA, 2025.
According to Adebayo, failure to meet the January 31 deadline attracts penalties regardless of whether PAYE deductions were fully remitted.
“The statutory deadline is 31 January of each year pursuant to Section 14(1) of NTAA, which states that ‘An employer shall file a return with the relevant tax authority for all emoluments paid to its employees, not later than 31 January of each year in respect of all employees in its employment in the preceding year,’” he stated.
He added, “Yes, penalties apply for late or non-filing pursuant to section 101 of NTAA, which states that ‘A taxable person who fails or refuses to file returns or knowingly files incomplete or inaccurate returns to the relevant tax authority in accordance with the provisions of this Act shall be liable to pay an administrative penalty of (a) N100,000 in the first month in which the failure occurs; and (b) N50,000 for each subsequent month in which the failure continues. Even if PAYE payments were fully remitted. Filing is a legal obligation, not optional.’”
Beyond employer sanctions, Adebayo warned that non-compliance has direct implications for employees, particularly in accessing Tax Clearance Certificates.
“Without these filings, employees will not be able to get their tax clearance certificates. It does not matter whether the employee worked for the full year or part of the year; their details must be filed,” he said.
He also clarified that PAYE remittance by employers does not replace individual tax obligations, stressing that employees must still file personal tax returns to qualify for tax clearance.
“The fact that your organisation has filed PAYE for you does not exempt you from filing individually. Employers only file what they have paid on your behalf, but personal filing is still required under the law,” Adebayo explained.
The LIRS director listed private companies, entrepreneurs, sole proprietors, and government ministries, departments and agencies operating in Lagos as employers required to comply, noting that tax liability is determined by employee residency rather than company headquarters.
“As long as an organisation has employees resident in Lagos, it must render returns to Lagos State, regardless of where its headquarters is located,” he added.
On current compliance levels, Adebayo disclosed that about 10,000 companies have begun the filing process, with over 7,000 successfully completed, while approximately 2,000 were flagged for errors or incomplete information.
“Our target is over 35,000 companies. Historically, many organisations wait until the last minute, which puts pressure on the system. That is why we are intensifying sensitisation efforts,” he said.
He urged employers to use the LIRS digital platform, noting that manual submissions were no longer acceptable.
“The process is now fully digital. Employers can file from the comfort of their offices using the LIRS portal. The templates are already provided to make compliance easier,” Adebayo stated.
According to him, prompt and accurate filing supports transparency, strengthens government planning, and enhances service delivery across the state, as he advised employers to act early to avoid penalties and system congestion.
