LIRS: Lagos 92% Individual Tax Filings Increase Reported

• Lagos State recorded a 92 percent increase in individual tax filings and an 11 percent rise in corporate filings between 2025 and 2026.
• Overall tax revenue collections in Lagos grew by 29 percent in the first half of 2026, with PAYE collections up by 36 percent.
• The LIRS analysis indicates that 54 percent of 2025 taxpayers may not pay in 2026, while 44 percent are expected to pay less under the new tax regime.
• The Lagos State Internal Revenue Service plans to strengthen digital platforms and use data to identify compliance risks and improve taxpayer services.
• The new tax regime, which began on January 1, 2026, involves four new tax laws covering taxation, administration, and revenue services.

The Lagos State Internal Revenue Service is committed to strengthening its digital platforms and utilizing data to identify compliance risks, enhancing its enforcement capabilities under the evolving tax landscape.

The Lagos State Internal Revenue Service (LIRS) has reported a remarkable 92 percent increase in individual statutory annual tax filings within Lagos State between 2025 and 2026. This significant growth in individual income tax filings Lagos was announced during the third edition of the Lagos Chamber of Commerce and Industry’s Organised Private Sector stakeholders’ forum, which focused on emerging tax matters and compliance levels under Nigeria's new tax regime.

During the event, Folusho Mustapha, the Director of Tax Audit, representing LIRS Executive Chairman Dr. Ayodele Subair, highlighted that corporate filings also experienced an 11 percent rise over the same period. These figures underscore a notable shift in taxpayer behavior and administration, six months following the implementation of the new tax framework. The LIRS tax revenue growth Lagos was further evidenced by a 29 percent increase in overall tax revenue collections during the first half of 2026, compared to the corresponding period in 2025. This included a 36 percent surge in Pay-As-You-Earn (PAYE) collections, while other revenue streams saw a 15 percent increase.

Despite the overall increase in filings and revenue, the LIRS's analysis revealed a complex picture of taxpayer response to the new regime. Mustapha indicated that a substantial portion of taxpayers might either cease paying taxes or reduce their contributions under the new system. Specifically, 54 percent of individuals who paid taxes in the 2025 assessment year were projected not to pay in 2026, while another 44 percent were expected to pay less than their 2025 liabilities. Conversely, only about two percent of the sampled taxpayers had begun making payments and were anticipated to exceed their 2025 tax obligations.

These Lagos tax compliance statistics highlight the critical need for ongoing taxpayer education, targeted compliance interventions, and heightened awareness regarding tax responsibilities and the repercussions of non-compliance. The Lagos State Internal Revenue Service enforcement strategy is evolving to address these dynamics, focusing on leveraging technology and data to ensure adherence to the new regulations.

The LIRS is committed to enhancing its operational effectiveness through digital transformation. Mustapha affirmed that the agency would continue to strengthen its digital platforms, utilize data analytics to pinpoint compliance risks, and improve taxpayer services. This strategic emphasis on digital enforcement is a cornerstone of the LIRS's approach as the Nigeria new tax regime impact continues to unfold, with a focus on simplification, engagement, and collaboration with the private sector.

However, the business community, represented by LCCI President Leye Kupoluyi, voiced concerns. Kupoluyi emphasized the desire for a tax system that is fair, predictable, efficient, and conducive to economic growth. He cautioned against repeatedly increasing the burden on existing, compliant businesses, warning that such an approach could weaken their capacity to invest, employ, expand production, and compete globally. Instead, he advocated for a more sustainable strategy centered on expanding the tax base, improving overall compliance, and reducing leakages.

The new tax regime officially commenced on January 1, 2026, introducing four new tax laws that govern taxation, administration, the Nigeria Revenue Service, and the Joint Revenue Board. This comprehensive legislative overhaul aims to streamline and modernize the nation's tax landscape. The LCCI President underscored that the true success of this new framework should be measured not solely by the volume of revenue collected, but by whether compliance has become simpler, the cost of compliance has decreased, the tax base has broadened, and investment confidence has improved.

Kupoluyi also stressed the importance of greater certainty for businesses adapting to the new framework, noting that frequent changes in tax rules, delayed regulatory guidelines, and inconsistent interpretations could adversely affect investment decisions. He urged the government to broaden the tax base, enhance compliance, mitigate leakages, intelligently deploy technology, reinforce enforcement against evasion, simplify compliance processes, and safeguard the productive capacity of businesses that are already compliant.

Lawyers and compliance officers in Lagos should be aware of the Lagos State Internal Revenue Service's significantly increased effectiveness in driving individual tax compliance and its strategic focus on digital enforcement under the new tax regime. This necessitates a proactive review of client tax strategies and compliance readiness to mitigate potential exposure to targeted interventions and ensure adherence to evolving tax obligations.

Source: Original reporting via The Punch