The Lagos State Government has unveiled a strengthened tax enforcement framework that will allow it to recover unpaid tax liabilities through banks, employers, and business partners of defaulting individuals and companies, reinforcing its commitment to fiscal discipline and sustainable public finance.
The Lagos State Internal Revenue Service (LIRS) said the move is part of a comprehensive strategy to expand the state’s revenue base, improve tax compliance, and address persistent leakages within the tax system of Nigeria’s most commercially active state.
According to the agency, the initiative is not a new tax policy but an enforcement mechanism already provided for under existing tax laws. These laws empower LIRS to appoint third parties including financial institutions, employers, contractors, and commercial partners as agents for tax recovery where a taxpayer fails to meet statutory obligations.
Strengthening Revenue Assurance in a High Pressure Economy
Lagos State relies heavily on internally generated revenue (IGR) to finance infrastructure development, healthcare delivery, education, transportation systems, and public safety. With a rapidly growing population and increasing demand for public services, revenue mobilisation has become a critical policy priority.
Despite improvements in tax administration over the years, officials at LIRS acknowledge that a substantial volume of assessed taxes remains unpaid. Much of this backlog, they say, is linked to deliberate non-compliance by some high-net-worth individuals, professionals, and corporate entities operating within the state.
“Tax compliance is fundamental to the social contract between government and citizens. Where individuals or businesses choose to disregard their obligations, the law provides lawful and structured mechanisms to recover those liabilities,” LIRS said in a statement.
How the Third-Party Recovery Framework Operates
Under the enforcement framework, LIRS may issue formal notices to banks requiring them to place liens or restrictions on accounts associated with tax defaulters, subject to due process and applicable legal safeguards.
Employers may also be directed to deduct outstanding personal income tax liabilities from salaries, bonuses, or terminal benefits of affected employees. In the case of contractors, consultants, or vendors, business partners who owe funds to a tax defaulter may be instructed to remit such payments directly to the Lagos State Government until the tax debt is cleared.
LIRS emphasized that the approach is corrective rather than punitive, aimed at restoring equity in the tax system and ensuring that compliant taxpayers are not unfairly burdened by the actions of defaulters.
Implications for Businesses, Employers, and Financial Institutions
The development carries significant implications for corporate governance, risk management, and stakeholder relations. Employers, banks, and business partners may now find themselves playing a more active role in tax enforcement, increasing the importance of compliance checks and accurate record-keeping.
Public affairs analysts note that tax compliance is increasingly intersecting with corporate reputation and regulatory trust. Companies that fail to meet their obligations or associate closely with defaulters may face not only financial consequences but also reputational exposure.
For employers and corporate leaders, the policy reinforces the need for stronger internal tax governance, employee tax verification processes, and proactive engagement with tax authorities.
A Growing Compliance and Reputation Issue
Beyond revenue generation, the enforcement drive reflects a broader governance narrative around accountability, transparency, and public trust. As Lagos positions itself as a regional business and investment hub, authorities are under pressure to demonstrate that rules are applied fairly and consistently.
For PR and communications professionals, the development highlights the growing overlap between regulatory compliance and corporate reputation management. Tax disputes, enforcement actions, or publicised recovery efforts can quickly evolve into reputational challenges if not managed strategically.
Call for Voluntary Disclosure and Engagement
LIRS has reiterated its preference for voluntary compliance, encouraging individuals and organisations with outstanding liabilities to engage early with the agency. According to officials, structured payment plans, reconciliations, and voluntary disclosures remain available options for taxpayers willing to regularise their status.
Early engagement, the agency noted, can help businesses avoid enforcement actions that may disrupt operations, strain stakeholder relationships, or attract negative public attention.
As Lagos continues to pursue economic growth, infrastructure expansion, and improved service delivery, authorities insist that a fair, transparent, and enforceable tax system remains central to achieving these goals.
source: gistreel.com
