Lagos State Tax Authority Warns Against Fake Transactions to Evade Taxes

The Lagos State Internal Revenue Service (LIRS) has cautioned taxpayers, including entities, partnerships, trusts, and individuals operating in Lagos State, against participating in artificial transactions aimed at reducing tax liabilities. The warning, issued by the Executive Chairman of LIRS, Mr. Ayodele Subair, emphasizes compliance with tax laws to promote transparency and fair tax administration.

The notice, effective from January 21, 2026, highlights the consequences of engaging in fictitious transactions, including penalties and audits under the Nigeria Tax Administration Act of 2025. Taxpayers are advised to ensure genuine commercial transactions, maintain proper documentation, disclose related party transactions, and adhere to arm's length principles to avoid penalties and adjustments by tax authorities.

Failure to comply with tax regulations, including providing inaccurate information or engaging in artificial transactions, may attract administrative penalties. The notice also references the Income Tax Transfer Pricing Regulations of 2018, emphasizing the importance of transparent disclosures to meet statutory obligations.