Residents of Lagos State are required to file their annual tax returns by March 31 each year, with penalties imposed on defaulters, according to officials of the Lagos State Internal Revenue Service.
Abideen Akande, special adviser to the executive chairman of the agency, said filing annual returns is compulsory for all residents who earn income, even if they believe they owe no tax.
Akande said the filing process allows the government to determine how much individuals earned in the previous year and the taxes already paid.
“Nigeria operates a self-assessment tax system. This means you voluntarily declare your income for a defined period,” he said.
Under the system, individuals must declare all income earned between Jan. 1 and Dec. 31 of the preceding year, including salaries, business income, rent and investment earnings.
Akande said employers are required to submit annual tax returns for their staff between Jan. 1 and Jan. 31, while individuals must file their own returns between Jan. 1 and March 31.
He noted that even residents whose income falls below the taxable threshold must still file their returns.
“For example, if you earned N800,000 in a year, which is below the taxable threshold of about N840,000, your tax liability will be zero, but you must still declare the income,” he said.
According to him, the filing process in Lagos is now fully digital through the agency’s e-tax platform introduced in 2018 and expanded after the COVID-19 pandemic.
Akande said manual filing was completely discontinued by 2021, allowing residents to submit their returns online.
The system also allows taxpayers to claim deductions and statutory reliefs, including pension contributions, health insurance payments and contributions to the National Housing Fund.
He said mortgage interest payments and life insurance premiums could also qualify for tax relief.
However, taxpayers cannot claim both rent relief and mortgage interest relief at the same time. Under the current law, rent relief is capped at N500,000 or 20% of gross income, whichever is lower.
Akande said the tax filing requirement also helps the state track economic activity and contributes to calculating the state’s gross domestic product.
He advised residents to file their returns early instead of waiting until the deadline.
“Once you know your total income, usually by mid-January, go ahead and file. There is no need to wait until March,” he said.
Akande explained that individuals are only assessed based on income actually received during the year.
“If you worked for 12 months but were paid for only 10 months, you declare only the income you received. The remaining amount will be declared in the following year when it is paid,” he said.
He also clarified that filing personal tax returns does not amount to double taxation even if employers have already deducted taxes at source.
For example, if an employer deducts tax from an employee’s salary, the employee must still declare the total income earned and indicate the tax already paid.
Akande said the system allows tax authorities to cross-check records submitted by employers and individuals.
Addressing concerns about multiple taxation, he said most taxpayers would actually pay less under the new tax regime.
“From our data, 54.7% of taxpayers will pay zero tax under the new regime, 43.7% will pay less than before, while about 1.6% will pay more,” he said.
He urged residents in both the formal and informal sectors to comply with the filing requirement, noting that those who fail to do so could face presumptive tax assessments.
For instance, a taxpayer who fails to file may be assessed 1% of estimated turnover as tax.
Akande also warned that defaulters could face administrative penalties under the law.
A taxable person who fails to file returns or submits incomplete or inaccurate information is liable to a penalty of N100,000 for the first month of default and N50,000 for each additional month until compliance is achieved.
