- The Lagos State Internal Revenue Service says filing annual tax returns is mandatory for Lagos residents, even if they owe no tax.
- He warned that defaulters risk a penalty of ₦100,000 for the first month and ₦50,000 for each additional month of non-compliance.
Abideen Akande, Special Adviser to the Executive Chairman of the Lagos State Internal Revenue Service, has explained why filing annual tax returns is mandatory for residents of Lagos, while also outlining penalties for those who fail to comply.
Speaking in an interview with The Guardian Nigeria, Akande said the tax system in Nigeria operates on a self-assessment basis, meaning individuals are expected to voluntarily declare their income for a given period.
“Filing of returns allows the tax authority to know how much you have earned in the preceding year and how much tax, if any, you have already paid in advance. Nigeria operates a self-assessment tax system. This means that you voluntarily declare your income for a defined period,” he said.
He further explained that filing tax returns involves declaring income earned in the previous year.
“Filing of returns by individuals involves disclosing the income you earned in the previous year because that year has already ended,” he said.
Akande noted that while many people often talk about their constitutional rights, they tend to ignore their obligations under the law.
“The interesting thing is that people often talk about constitutional rights, but shy away from constitutional obligations,” he said.
“Unlike the filing by employers that is done in January, which is predicated only on statutory provisions, filing by individuals is actually predicated on both the Constitution and the law. That tells you how important it is. In any organised society, you must have a tax system.”
He added that under the self-assessment system, individuals declare their income and disclose any tax that has already been deducted from their earnings.
“If you still owe the State government, say, N5 or N10, you go ahead and pay it,” he explained.
Akande said individuals who cannot pay immediately may request a payment plan.
“If you cannot pay immediately, you can approach the tax authorities and request a payment plan. For instance, you may say: ‘Please allow me to pay N3 now, N3 next month, and N4 later.’ If the tax authority is satisfied that you are genuinely facing financial challenges, it may approve the arrangement.”
He stressed that filing tax returns is not optional, even for individuals whose income falls below the taxable threshold.
“Even if by your own assessment, you believe you do not owe the government any money, you are still expected to file,” he said.
“For example, you may indicate that all the income you earned last year was below N840,000, which is around the annual equivalent of the minimum wage threshold. In that case, you would automatically not be liable to pay tax.”
He added that residents must still declare their earnings even if the final tax liability is zero.
Akande also explained that tax returns can be filed online through the LIRS e-tax platform, where individuals can enter their income details and claim relevant tax reliefs.
According to him, the filing period begins on January 1 and closes on March 31 each year. For 2026, residents are expected to file returns for income earned between January 1, 2025, and December 31, 2025.
He warned that failure to comply with the requirement could attract financial penalties.
“Under the new law, a taxable person who fails or refuses to file returns, or knowingly submits incomplete or inaccurate returns, is liable to an administrative penalty,” Akande said.
“The penalty is N100,000 for the first month of default and N50,000 for each subsequent month until compliance is achieved.”
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