LIRS GRANTS ADDITIONAL INCENTIVES & RELIEFS FOR TAXPAYERS IN LAGOS STATE

The Lagos State Internal Revenue Service (LIRS), on 9 July 2020, issued a public notice on the implementation of additional tax incentives and reliefs for taxpayers (individuals and businesses) in Lagos State

The LIRS had previously granted 3 months extension for the filing of annual returns from 31 March 2020 to 30 June 2020. It had also introduced video conferencing as the “default mode” for conducting Tax Audit Reconciliation Committee (TARC) meetings.

 

Highlights of the Public Notice

The additional measures being implemented by the LIRS to ease the impact of the COVID-19 pandemic on taxpayers are as follows:

  • Outstanding liabilities can be settled in installments on a case by case basis to ease the cashflow impact on taxpayers.
  • Waiver of penalty on late payment of PAYE liabilities that were due during the lockdown period in the State (March-May 2020).
  • Waiver of penalty due on late filing of 2020 annual tax returns (Form A).
  • Waiver of interest and penalty on outstanding tax audit liabilities from 2009 to 2015 for entities that present and keep to a structured payment plan that terminates on or before 31 December 2020.
  • Grant of 20% tax credit in the 2021 year of assessment for COVID-19 cash and kind donations made to Lagos State Government, but not exceeding 35% of the tax due.
  • Additional payment channels to ensure tax payments are easier, simpler, and more convenient for taxpayers.

 

Key takeaway 

These palliatives are laudable as they would help to mitigate some of the impacts caused by the pandemic. However, we implore the LIRS to consider additional palliatives that would have an impact on all taxpayers, some of which include; 

  • Extending the waiver of penalty and interest on outstanding tax audit liabilities to more recent years rather than limiting it to 2009 to 2015. Many entities would have closed out on tax audits for these years but may still have outstanding liabilities from more recent years after 2015.
  • Extending the deadline for PAYE remittance from the 10th day of the month to the last day of the month following the deduction.
  • Guidelines and procedures for fresh tax audit exercise should be made public as several taxpayers are already receiving fresh tax audit notification from the LIRS in respect of the backlog of the tax audit exercise. We expect that these guidelines and procedures will align with the Lagos State Government guidelines on social distancing and other health safety protocols.

Notwithstanding, we encourage eligible taxpayers to take advantage of the palliatives already set up by the LIRS. 

Should you require further clarification with regards to these palliatives and its impact on your business, please contact us at Mazars Nigeria.