The Lagos State government on Monday signed an agreement with the Federal Inland Revenue Service (FIRS) to harmonise tax administration, raise system efficiency and proffer solutions to the challenges of multiple taxation.
Governor Babajide Sanwo-Olu presided over the agreement signing event which will see to the establishment of a joint tax audit system that will address duplication of efforts and facilitate exchange of data that are relevant to enforcement of extant tax laws.
Clem Agba, minister of state for finance, witnessed the agreement signing which was held at the State House in Marina, Lagos, with relevant members of the Lagos State executive in attendance.
Aside from offering joint jurisdiction in tax audit and bringing about an integrated system of tax compliance, the scope of the MoU also empowers tax authorities of both federal and Lagos to exchange information sourced under International Tax Treaties in line with global protocols, while creating a common tax collection platform to eliminate double taxation.
Sanwo-Olu described the collaboration as “epoch-making”, noting that the conversation for the harmonization of the two agencies’ mandates started about a year ago, based on the need to forge a common front in widening the tax net to raise the country’s tax to GDP ratio.
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The governor observed that Nigeria had maintained an unimpressive tax to GDP ratio of between six to eight percent, despite the yearly record-breaking turnovers by both FIRS and LIRS. This, he said, has mounted pressure on the nation’s resources and created an imbalance in government’s expenditure. Sanwo-Olu said Nigeria must operate at the same level with other nations within sub-Saharan Africa doing between 14 and 15 percent in tax to GDP ratio in order to support the government’s development programmes and improve accountability.
“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. 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,” Sanwo-Olu said.
On his part, Agba said the dwindling oil revenue necessitated the need to expand the nation’s tax base to fund development projects. The minister added that duplication of efforts by both agencies would lower the efficiency of both Lagos and federal governments in resource generation, while limiting both parties to collect tax.
