The Lagos State Internal Revenue Service (LIRS) has enforced specific provisions of the Nigeria Tax Administration Act (NTAA) 2025 that allow it to recover unpaid taxes directly from banks, employers, and other third parties holding funds on behalf of defaulting taxpayers, but experts warn that enforcement could face legal and regulatory challenges.
In a recent publication made by LIRS on its website, the tax authority said it would exercise its statutory ‘power of substitution,’ which enables it to direct any person or institution owing money to a taxpayer, or holding funds on their behalf, to remit such sums to the government in settlement of outstanding tax liabilities.
Section 60 of the Nigeria Tax Administration Act (NTAA) 2025 highlights the legal basis for LIRS’s move to recover unpaid taxes from banks, employers, and other third parties.