The Federal Inland Revenue Service (FIRS) has signed a memorandum of understanding (MoU) with Lagos State to establish a joint tax audit system.
The MoU was signed on Monday, with FIRS Chairman Muhammad Nami and Lagos Governor Babajide Sanwo-Olu in attendance.
Nami praised the MoU, saying that it would help both agencies to build capacity in their respective areas and to raise revenue for development programmes.
He added that the collaboration would help Lagos and the federal government to raise revenue for projects and development programmes.
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Sanwo-Olu also spoke about the importance of the MoU, emphasizing the need for the two agencies to work together to widen the tax net in Nigeria, which has a low tax-to-GDP ratio of 6 to 8 per cent.
He said that the partnership would resolve the duplication of efforts between the two agencies and increase the exchange of information relevant to enforcing tax laws.
The MoU follows a year of discussions and comes after a dispute between the state and federal government over VAT collection.
The governor said that better service delivery and more efficient tax collection would result from the partnership, and the cost of tax collection would be reduced, leading to better customer satisfaction and more resources for the government.
The chairman of LIRS, Ayo Subair, added that the partnership would also reduce the cost of administration for both tax authorities and prevent tax evaders from hiding.
This new joint tax audit system will help to eliminate the hiding places for recalcitrant taxable persons and entities, and bring about quick solutions to tax disputes and incidents.