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LIRS Chairman, AYODELE SUBAIR
Mr. Ayodele Subair is the Executive Chairman of Lagos State Internal Revenue Service. He holds a very powerful post In Lagos, as he tries to generate more tax for the state and also expose tax evaders.
Mr Subair was born on May 21, 1960. He holds a Bachelor of Arts Degree in Economics from the Metropolitan University of Manchester, United Kingdom and a Masters Degree in Business administration from the University of Lagos.
He is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and member of both the Chartered Institute of Taxation of Nigeria (CITN) and the Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN).
Subair has over 34 years working experience which started with the Price WaterHouse before venturing into private practice in 1987 with the Hamzat Subair and Co. Chartered Accountants where he is managing partner.
He was a pioneer director of Lagos State Lotteries Board and has worked with various international agencies such as the International Finance Corporation (IFC).
A few weeks ago, he spoke at a conference organised by Lagos Physical Planning Permit Authority and Lagos Chapter of Real Estate Developers Association Of Nigeria, where he reveals why developers don’t like to pay tax
He revealed that for businesses to thrive in a state, policies that promote micro-economy stability, infrastructure development, and access to resources are necessary. To effectively address the ever-growing challenges of the 21st-century economy like Lagos state, taxation, especially through direct assessment, should be at the forefront considering the number of economically active residents in the state. I single out direct assessments because they are basically two types of personal income taxes: we have pay as your earn and direct assessment. In term of pay as you earn, all the employers are agents. The withhold from salaries and remit to the state government. We don’t really have problem with that. Yes, there is a bit of problem but it’s easier to manage. The real challenge for us is direct assessment. Shows promoters, and owners of businesses. So a lot of my conversations will be directed more toward direct assessment.
At the moment, most of our taxes are raised from people in employment. Meanwhile, we have all manners of billionaires. Many of you are seated in this all. The agency is saddled with the responsibility of generating revenue for the state by ensuring compliance by statutory obligations from all taxable residents of the state through (1), prompt and honest filing of income tax returns. We have a big problem there. Most people do not file and some who file don’t file honestly. That’s a big problem we must correct. Because how do we build a civil society? How do we build a society with law and order? Alot of things are created through the payment of income taxes. Adequate payment of taxes as enshrined in the 1999 constitutions the agency through the its Physical Planning Permit unit ensures individual seeking the government approval especially as relate to building planning permits pay adequate personal income tax.
The important of this is that, every resident in Lagos State must publicly declare his income to ILRS and pay his personal income tax whether or not he requires plan permit of any form of service from the Lagos state government.
Section 84 of personal income tax specifies that all ministries, departments and agencies must demand for tax clearance certificate which is meant to cover 3 consecutive years. So that section 85 gives us power that anybody who wants to deal with the government is up to date with his tax status. Section 95 of personal income tax also lists specific transactions for which tax clearance is demanded. Some of those transactions include: application for CofO, application for plot of land and any other transactions. So asking for your tax clearance is statutory. It’s imperative to know that the act under reference is not a Lagos State law but a federal law application in every state of the federation. In other word, demand for tax clearance certificates from applicants for building plan approval is enforceable in every state.
Also, section 95 imposes a penalty of 5 million naira or 3 years jail term or both on Banks, MDA’s that fail to demand from any applicant and the very same from the relevant authority. As such, by demanding the tax clearance from applicant and verify same MDA’s are only adhering to the statutory obligation.
Building permit approval at ILRS are basic function as it relates to building plan approval is to confirm applicant is up to date with filing of his/ her annual returns and payment of tax due.
Ideally, the applicant must have obtained a current tax clearance certificate. This requirement by ILRS is expected to be front loaded and treated with a condition precedent to acceptance of the application by the Ministry of Physical Planning. So we collaborate with the Ministry of Physical Planning. We tell them the question they should ask applicants and working together we can achieve that objective to ensure that every applicant has a tax clearance certificate.
In the course of confirming tax clearance certificate, we are usually confronted with the under-listed situations which have its unique difficulties and challenges. (1), the applicant of the tax payer has paid tax but this tax is not adequate. The applicant provides evidence of tax payment but the amount isn’t commensurate with income, social economic status or proposed building project. For instance: we raise additional assessment on the income of the applicant and we advise him through the originating ministry. Criteria usually use by us include : the area the project is cited, the type of structure/number of floors, etc. Very often we are confronted with the fact that, somebody has continuously paid 20 thousand naira every year as his income tax, as if the income is static. So 10 years the line he comes to us that he wants to build in Banana Island and gives us his tax clearance certificate. So you want to build in Banana Island yet you declare very low income and you are paying 20 thousand consistently. That can’t work. That’s why we reassess a lot of applicants. Secondly, proxies are used to shield the real owner of property owners from tax exposure. There are big boys and girls who don’t want their names appear in anywhere. They want to operate below the radar. They will get proxy who will do all the applications. Some will go to developers or contractors who have some directors who are probably silent or dormant and don’t know anything; they don’t know their names are been put forward. These people are paying 10 thousand Naira yearly as income tax and suddenly an application is coming from them as directors to build 21 storeys. That can’t work. So we usually lift the veil. We see through all these transactions and we want to know the real owner of the developments. Half of a time we compromise so that we don’t delay the application but they agree to pay more than what they present before we raise the question so that the transaction can go through.
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