With the March 31 deadline for filing individual annual tax returns approaching, the Lagos State Internal Revenue Service (LIRS) has clarified who must file, what documents are required, and the penalties for non-compliance.
In a recent interview, the Director of Tax Audit at LIRS, Foluso Mustapha, explained that many taxpayers misunderstand the process—especially employees whose taxes are already deducted through Pay-As-You-Earn (PAYE).Here is a breakdown of the key issues taxpayers in Lagos should understand.
What Is an Individual Annual Tax Return?
According to LIRS, the requirement applies to all taxable residents of Lagos State.
This includes:
Salaried employees
Business owners
Freelancers and gig workers
Individuals with multiple sources of income
Mustapha explained that the return allows the tax authority to determine a taxpayer’s accurate tax position.
“An individual tax return is a formal declaration expected to disclose all income, deductions, and reliefs applicable to the taxpayer for the preceding year,” he said.
Is Filing Tax Returns Mandatory?
Yes. Filing an annual tax return is a legal requirement for all taxable residents in Lagos State.
Even Lagos residents who do not owe additional tax must still submit their returns.
“Filing is not optional. It is a statutory obligation imposed on every taxable individual resident in Lagos State,” Mustapha said.
What Is the Deadline?
The deadline for filing individual tax returns is March 31 every year.
With the March 31 deadline for filing individual annual tax returns approaching, the Lagos State Internal Revenue Service (LIRS) has clarified who must file, what documents are required, and the penalties for non-complianc.
In a recent interview, the Director of Tax Audit at LIRS, Foluso Mustapha, explained that many taxpayers misunderstand the process—especially employees whose taxes are already deducted through Pay-As-You-Earn (PAYE).
Here is a breakdown of the key issues taxpayers in Lagos should understand.
What Is an Individual Annual Tax Return?
According to LIRS, the requirement applies to all taxable residents of Lagos State.
This includes:
Salaried employees
Business owners
Freelancers and gig workers
Individuals with multiple sources of income
Mustapha explained that the return allows the tax authority to determine a taxpayer’s accurate tax position.
“An individual tax return is a formal declaration expected to disclose all income, deductions, and reliefs applicable to the taxpayer for the preceding year,” he said.
Is Filing Tax Returns Mandatory?
Yes. Filing an annual tax return is a legal requirement for all taxable residents in Lagos State.
Even Lagos residents who do not owe additional tax must still submit their returns.
“Filing is not optional. It is a statutory obligation imposed on every taxable individual resident in Lagos State,” Mustapha said.
What Is the Deadline?
The deadline for filing individual tax returns is March 31 every year.
Returns filed after the deadline may attract financial penalties.
What Are the Penalties for Not Filing?
Failure to file tax returns can attract significant penalties:
₦100,000 for the first month of default
₦50,000 for each additional month of delay
In severe cases, LIRS may invoke a legal recovery measure known as “power of substitution.”
This allows the tax authority to recover unpaid taxes through third parties holding funds on behalf of the taxpayer, such as:
Banks
Business partners
Tenants paying rent
Mustapha noted that this measure is only applied after tax liability has been properly established and the taxpayer fails to comply.
Do Employees Who Pay PAYE Still Need to File?
Yes.
Although employers deduct taxes under the Pay-As-You-Earn (PAYE) system, employees must still file their annual tax returns.
LIRS explains that PAYE deductions are advance tax payments, not a replacement for filing.
Employees are expected to declare other income sources such as:
Rental income
Investments
Side businesses or freelance work
“PAYE is a withholding mechanism and not a substitute for filing obligations,” Mustapha said.
What If You Earned Little or No Income?
Taxpayers who earned little or no income during the year are still required to file.
In such cases, they can submit what is known as a “nil return,” indicating that no tax is payable.
Documents Required for Filing
To complete their tax returns, individuals are advised to prepare the following documents:
Salary or payroll records
Bank statements
Financial statements (for business owners)
Rent receipts
Investment income records
Evidence of deductible expenses
These documents help determine the taxpayer’s correct tax liability.
What Should First-Time Filers Do?
First-time taxpayers must:
Obtain a Tax Identification Number (TIN)
Gather records of income earned during the year
Identify deductible expenses
Complete the tax return form on the LIRS portal
The process applies to employees, freelancers, business owners, and gig workers.
Do Freelancers and Content Creators Need to File?
Yes.
LIRS says income earned through digital platforms or independent work must also be declared.
This includes income from:
Freelance services
Online businesses
Brand partnerships
Digital platforms and content creation
What About Retirees or People Who Changed Jobs?
Retirees are not automatically exempt.
While pension income may be tax-free, retirees must still declare income from other sources such as:
Rental property
Investments
Business activities
Individuals who changed jobs within the year must also file returns to reconcile income received from multiple employers.
Does Filing Mean You Will Pay More Tax?
Not necessarily.
According to LIRS, filing a tax return simply determines a taxpayer’s actual tax position.
“Filing a return does not create new tax. It simply establishes your correct tax position based on income actually earned,” Mustapha explained.
Is There a Cost for Filing?
No.
Submitting annual tax returns to LIRS is free of charge, and taxpayers can complete the process online through the tax portal.
What If You Make a Mistake While Filing?
Taxpayers who discover errors after submitting their returns can correct them by filing an amended return or voluntarily disclosing the mistake.
How to Avoid Tax Scams
LIRS also warned residents to be cautious of individuals impersonating tax officials.
Taxpayers should avoid making payments through unofficial channels or sharing sensitive information with unverified individuals.
Suspicious messages or requests should be reported through official LIRS channels.
Why Tax Compliance Matters
Mustapha emphasised that taxes remain a major source of funding for development in Lagos State.
According to him, tax revenues support infrastructure projects, healthcare services, education, and transportation across the state.
“Tax compliance is not merely an administrative function; it is the financial lifeblood of Lagos State,” he said.
He added that voluntary compliance enables the government to expand public services and improve the quality of life for residents.
