Lagos Explains New Tax Law Allowing Recovery of Unpaid Taxes Through Banks, Third Parties
By Erewunmi Peace
The Lagos State Government has clarified reports surrounding a new tax enforcement policy, stating that the law does not allow indiscriminate seizure of funds from friends or family members, but rather provides legal tools to recover unpaid taxes from defaulting taxpayers.
According to the Lagos State Internal Revenue Service (LIRS), the policy is based on the Nigeria Tax Administration Act (NTAA) 2025, which empowers tax authorities to apply a mechanism known as “power of substitution.” Under this provision, LIRS may issue notices to banks, employers, tenants, business partners, or debtors who hold or owe money to a tax defaulter, directing them to remit such funds to offset outstanding tax liabilities.
LIRS explained that the action applies only to funds belonging to or owed to the taxpayer and not to personal savings of unrelated individuals.
The law targets persistent tax defaulters and covers taxes such as Personal Income Tax, Capital Gains Tax, Stamp Duties, and Withholding Tax administered by the state.
The agency emphasized that the enforcement process follows due legal procedures and is aimed at improving tax compliance, expanding internally generated revenue, and ensuring fairness in the tax system.
The clarification comes amid public concerns triggered by online reports suggesting that the government could seize money from friends or relatives of taxpayers without justification. Officials insist that such interpretations are misleading and urged residents to seek information from verified sources.
