Presentation given by Mr. Adebayo Ayodele, Director, New Growth Areas, Lagos State Internal Service (LIRS) on Tax Compliance Requirements for MSMEs in Lagos State

1. Seminar on Tax Requirements For MSMEs in
Nigeria
Organized by:
FATE FOUNDATION
Thursday, 11TH February 2016
TAX
COMPLIANCE
REQUIREMENTS
FOR MSMEs in
LAGOS
By
Olufolarin Ogunsanwo
Executive Chairman Lagos State Board of
Internal Revenue
&
Chief Executive Officer Lagos State Internal
Revenue Service

2. INTRODUCTION
The role of Micro, Small and Medium Enterprises (MSMEs) in
economic development cannot be overemphasised. They play a
pivotal role in several pathways not limited to job creation. They
are largely responsible for driving innovation and promoting
competition in developing economies.
MSMEs classifications are based on two criteria, employment and
non fixed assets as shown below
SIZE CATEGORY EMPLOYMENT ASSETS (# MILLION)
Micro Enterprises Less than 10 Less than 5
Small Enterprises 10 - 49 5 - 49
Medium Enterprises 50 - 199 50 - 500
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3. INTRODUCTION
 In a case whereby for example an enterprise has
assets worth #8 Million but employs 7 persons, the
employment – based classification takes precedence
and the enterprise will be deemed a micro enterprise

SIZE CATEGORY TOTAL NUMBER
IN NIGERIA
NUMBER IN
LAGOS
Micro Enterprises 36,994,578 3,224,324
Small Enterprises 68,168 11,044
Medium Enterprises 4,670 619
TOTAL 37,067,416 3,235,987
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4. TAXABLE PERSONS
 Every individual resident in Lagos State other than
members of the Armed Forces, Police Force and
Naval Force
 Registered Business domiciled in Lagos State
 Staff PAYE,
 Personal income tax,
 Development levy
 Business premise levy,
 Consumption tax
 Withholding tax (individuals only)
 Partners with principal office in Lagos State
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5. TAXES COLLECTABLE BY LIRS
 Personal Income Tax in respect of individuals
resident in Lagos State.
 Withholding tax (individuals only)
 Capital Gains tax (individuals only)
 Stamp duties on instrument executed by individuals
 Business Premises levy
 Development levy
 Pools betting, lotteries gaming and casino taxes
 Hotel occupancy and Restaurant consumption tax
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6. SPECIFIC REQUIREMENTS FROM LIRS
(Individuals)
 File a return of income within the first 90 days of
every year of assessment S. 41 PITAM 2011
 Walk into the nearest Tax Station to be assessed by
the Tax Authority (S.54) and pay the assessed sum
at any designated bank in Lagos State
 Walk into the nearest Tax Station to apply for the
issuance of a tax card (ETCC);
 Necessary books of accounts of income from all
sources must be kept and available when required
(S.52)
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7. REQUIREMENTS FROM LIRS
 At the commencement of operations, every business
owner is required to register with LIRS for tax deduction
purpose.
 File an annual return of all emoluments paid to its
employees not later than 31st January of every year in
respect of all its employees in the preceding year (S.
81(2))
 PAYE deductions must be made in the prescribed form
from emoluments of staff monthly and remitted to LIRS.
 All business owners are to apply for and obtain ETCC for
their employees.
 Notify LIRS of relevant organisational change as they
occur.
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8. CONSEQUENCES OF NON-COMPLIANCE
 Any employer who fails to file returns as prescribed,
shall be liable on conviction to a penalty of
#500,000 for corporate body and #50,000 for
individual (S.81(3) or files incorrect returns shall be
liable to #20,000 fine (S.95)
 Refusal to keep books of account shall attract a
penalty upon conviction of #500,000 for corporate
body and #50,000 for individual (S.52)
 Failure to deduct or remit tax within 30 days of
deduction attracts penalty of 10% of such tax S74).
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9. LIRS FORMS
FORM A – Income Tax Form & Claims for
Allowances & Reliefs.
FORM ‘A’ – Abridged (Self Assessment). To be
Abolished.
FORM L1 – Notice of Assessment (Direct
Assessment/ Individual)
FORM H1 – Employers Annual Declaration.
ETCC FORM – For Procurement of Tax card.
FORM HCL1 – Registration Form (HORCL)
FORM HCL2 – Remittance (Return) Form.
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10. MAKING TAX PAYMENTS EASIER FOR MSMEs
 Introduction of filing annual returns by e mail
 24 hour Customer service to attend to all enquiries
from tax payers
 Provision of mini tax stations at strategic places for
easy access by MSMEs
 Upgrade of MTCCs printed for non professionals to
ETCC
 Professional and highly skilled tax officers to educate
owners of MSMEs and assist with filing of various
tax forms
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11. Conclusion
To move Lagos State forward, all taxable adults must
ensure they perform their civic obligations by
remitting their taxes when due.
The Lagos State Government in return will provide a
conducive environment for growing businesses
through the provision of infrastructure, adequate
security, good governance and empowerment
schemes to promote profitability.
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12. THANK YOU FOR
LISTENING.
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