It was a typical Lagos morning, traffic snarls, street hawkers calling out deals, and business owners already chasing deadlines.
But this time, a new kind of alert was spreading through WhatsApp groups and office WhatsApp statuses: Lagos was changing how it collected overdue taxes.
At the centre of this shift was a public notice from the Lagos State Internal Revenue Service (LIRS). The agency explained that when taxpayers fail to pay what they owe, it now had another tool, one that reaches beyond the usual reminders and penalties.
In the notice, LIRS spelled it out clearly:
“The NTAA 2025 empowers the Lagos State Internal Revenue Service to direct any person holding money on behalf of, or owing money to, a taxpayer who has failed to pay an established final tax liability when due, to remit such money to the Service in settlement (or partial settlement) of the outstanding tax.”
For many, that sentence felt like a plot twist. It meant that if a taxpayer refuses to settle a debt, Lagos could now send a notice to a bank, employer, tenant, debtor, or business partner who was holding money for that taxpayer, and order them to hand it over instead.
LIRS described this as “the Power of Substitution,” calling it “a lawful collection mechanism designed to ensure efficient recovery of unpaid taxes.”
This could cover Personal Income Tax, Capital Gains Tax, Stamp Duties and Withholding Tax, any of the revenue streams the agency administers.
Imagine a landlord collecting rent, a bank holding business accounts, or a partner waiting to pay an invoice.
Under the new framework, each could receive a substitution directive telling them to remit funds directly to LIRS instead of to the tax defaulter.
Once that happens, “the tax liability is deemed paid to the extent of the remittance made pursuant to the substitution.”
But Lagos didn’t leave anyone guessing about consequences. The notice warned plainly: “Failure to comply with such directive constitutes an offence under the Act.”
The directive places clear obligations on everyone who might receive one. Banks, for example, must “remit the stated amount to LIRS without delay and provide confirmation of compliance through the LIRS e-Tax platform.” They must also “report the taxpayer’s available balances and any encumbrances as may be requested.”
Meanwhile, employers, tenants and others are instructed to “withhold the specified amounts from funds due to the taxpayer and remit them to LIRS within the timeframe stated in the notice.”
There’s still a path for dispute, though. The notice reminded recipients that they can file a written objection within 30 days if they disagree with an assessment.
For Lagos, this announcement felt less like a bureaucratic update and more like a turning point, one that extends the reach of tax enforcement into the financial relationships that bind everyday business life in Africa’s busiest city.
