On Monday, a Memorandum of Understanding was signed by the Lagos State Government and the Federal Inland Revenue Service to establish a cooperative tax audit system.
The idea, according to Babajide Sanwo-Olu, the governor of Lagos State, is to eliminate duplication of efforts and make data sharing about the enforcement of current tax rules possible.
The MoU must be signed in order for both parties to be united, according to Sanwo-Olu.
“The MoU is in the best interest of the public, as it affirms the reason why we need to come together and strengthen the cordial working relationship between the two agencies,” he said.
Lagos state Government and the Federal Government couldn’t agree on how to collect value added tax in the state in 2021.
Sanwo-Olu signed a bill into law requiring Lagos to collect VAT in accordance with the Rivers state’s VAT statute.
The bill demanded that Lagos State be given the authority to collect VAT in place of FIRS, a representative of the federal government.
Speaking about the new development, the governor revealed the necessity of forging a united front in order to widen the tax base and increase the country’s tax share of GDP.
Sanwo-Olu claimed that despite the FIRS and Lagos Internal Revenue Service’s yearly impressive turnovers, the nation still has a subpar tax-to-GDP ratio of six to eight percent.
“Studies have shown that there would be better service delivery to the citizens and improvement in the 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.
“For us as a state, we are humbled by this collaborative effort and we believe our citizens will be the ultimate beneficiaries of this initiative,” Sanwo-Olu said.
The MoU, according to FIRS Chairman Muhammad Nami, will allow both parties to grow in their respective fields of expertise.
He pointed out that raising money for projects will benefit both Lagos State and the Federal Government.