The Lagos State Internal Revenue Service has warned employers of labour in the state to comply with statutory tax filing obligations as the 31 January deadline for annual returns approaches, stressing that late or non-compliance will attract stiff penalties as enshrined in the tax laws.

The Director of Personal Income Tax, Lagos State Internal Revenue Service, Mr Ayodele Adebayo, issued the warning during an interview with The PUNCH in his office on Thursday.

The PUNCH reports that the Nigeria Tax Administration Act, 2025, mandates employers of labour to file their annual returns with the tax authorities for the preceding year.

Adebayo described January as a critical period in the tax calendar, particularly for employers required to file annual PAYE returns for employees engaged in the preceding year.

According to him, employers are statutorily mandated to file annual returns detailing all employees engaged during the year, whether such employees are still in service or have exited.

“January is a very critical month for tax compliance. What is due at this time are the employers’ annual returns, which require employers to file comprehensive details of all employees engaged in the course of the year,” he said.

Employers are required to submit their annual Pay As You Earn schedule, a detailed list of employees and their earnings, taxes deducted and remitted for the year under review and monthly returns of deduction of tax at source (PAYE & WHT) pursuant to Section 28 of the Nigeria Tax Administration Act, 2025, which states that ‘Every person who has an obligation to deduct and remit tax under this Act or any other tax legislation shall render monthly returns to the appropriate tax authority, as specified in the regulation issued for that purpose.’

On the consequences of late or non-compliance, Adebayo said, “The statutory deadline is 31 January of each year pursuant to Section 14(1) of NTAA, which states that ‘An employer shall file a return with the relevant tax authority for all emoluments paid to its employees, not later than 31 January of each year in respect of all employees in its employment in the preceding year.’

“Yes, penalties apply for late or non-filing pursuant to section 101 of NTAA, which states that ‘A taxable person who fails or refuses to file returns or knowingly files incomplete or inaccurate returns to the relevant tax authority in accordance with the provisions of this Act shall be liable to pay an administrative penalty of (a) N100,000 in the first month in which the failure occurs; and (b) N50,000 for each subsequent month in which the failure continues. Even if PAYE payments were fully remitted. Filing is a legal obligation, not optional.”

Adebayo emphasised that the filing goes beyond mere submission of documents, as it directly affects employees’ ability to obtain Tax Clearance Certificates.

“Without these filings, employees will not be able to get their tax clearance certificates. It does not matter whether the employee worked for the full year or part of the year; their details must be filed,” he stated.

The LIRS director clarified that while employers file PAYE returns on behalf of employees, individuals are still required to file personal returns to be eligible for tax clearance.

“The fact that your organisation has filed PAYE for you does not exempt you from filing individually. Employers only file what they have paid on your behalf, but personal filing is still required under the law,” he said.

He listed corporate organisations, entrepreneurs, sole proprietors, and government ministries, departments and agencies operating within Lagos State as employers of labour obligated to comply with the filing requirements.

Adebayo noted that tax filing is guided by the residency rule, which requires taxes to be paid to the state where the employee resides.

“As long as an organisation has employees resident in Lagos, it must render returns to Lagos State, regardless of where its headquarters is located,” he added.

Providing an update on compliance levels, Adebayo disclosed that about 10,000 companies have commenced the process of filing their annual returns so far, with over 7,000 successfully completing it, while about 2,000 were flagged for incomplete or incorrect information.

“Our target is over 35,000 companies. Historically, many organisations wait until the last minute, which puts pressure on the system. That is why we are intensifying sensitisation efforts,” he said.

He urged employers to take advantage of the LIRS digital filing platform, noting that manual submission of annual returns was no longer acceptable.

“The process is now fully digital. Employers can file from the comfort of their offices using the LIRS portal. The templates are already provided to make compliance easier,” Adebayo said.

The LIRS director added that accurate and timely tax filing enhances transparency, supports effective government planning, and improves the state’s ability to deliver infrastructure and public services.

He advised employers and taxpayers to comply early to avoid sanctions and system congestion as the January deadline draws closer.