LIRS, FIRS signs MoU on implementation of joint tax audit

By Joy Obakeye

The Lagos State Internal Revenue Service (LIRS) and Federal Inland Revenue Service (FIRS) have signed a Memorandum of Understanding (MoU) on the exchange of information and implementation of a joint tax audit and investigation exercise.

At the signing ceremony, the
Lagos State Governor, Babajide Sanwo-Olu, disclosed “We have just witnessed an epoch-making ceremony between the Federal Inland Revenue Service and Lagos Inland Revenue Service.

According to Sanwo-Olu, “This collaboration did not just happen by chance; it is a conversation we started about a year ago with the chairman of FIRS when both parties reviewed their successes and limitations. It was clear there was a need for a relationship to be consummated. Both FIRS and LIRS have been breaking records of their tax collection and administration yearly, but this is not enough.

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

The Executive Chairman, of LIRS, Ayodele Subair signed on behalf of Lagos State, and his counterpart, Muhammad Mamman Nami, Executive Chairman, FIRS signed on behalf of the Federal Government.

LIRS Executive Chairman, Ayodele Subair, said the importance of the agreement was to foster greater collaboration between the two agencies.

He said though both tax agencies are not only independent of each other but different in the types of taxes they administer, the collaboration between the tax authorities was to promote the smooth operation of activities not only for the benefit of tax authorities but for improved service delivery for taxpayers.

“Notwithstanding its inclusion as a fundamental obligation of every Nigerian citizen under Section 24 (f) of the 1999 Constitution as amended, filing of annual income tax returns or payment of tax there from is not an issue that citizens are keen on.

Nonetheless, citizens expect to have the direct benefit of democracy and good governance without remembering that the most reliable and sustainable means of Domestic Resource mobilization for Government expenditure is taxation,” Subair said, adding that “there is no reason to debate the above as it has been established that tax compliance and good governance are expected to co-exist as the undividable social contract that binds citizens and governments anywhere in the world. Therefore, citizens and governments are expected to fulfil their end of the bargain in achieving a balance.”

He listed some of the expected MoU benefits to include, a reduction of compliance costs for taxpayers; improved transparency in the tax administration process, which will impact tax disputes, incidences and reconciliation; reduced administration costs for both tax authorities; and elimination of hiding place for recalcitrant taxable persons and entities.

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The FIRS chief, Muhammad Nami, said the essence of the collaboration between the FIRS and LIRS was to enable the two agencies to carry out joint projects together, adding that in the course of its investigations, they both work as a team while the third and most important reason would be to ensure automatic exchange of information which would enable the agency get a bigger data for seamless tax administration.

“We will work together as a team during the investigation and have an automatic exchange of information. With this, we will be able to carry out our mandate seamlessly. As part of the joint operation, we will be able to implement presumptive tax as far as issues of tax administration are concerned.”