‘eTax has drastically reduced cost of compliance for taxpayer

Lagos State Internal Revenue Service (LIRS) recently migrated from the electronic banking system (EBS-RCM) to e-Tax Optimisation platform. In this interview with GEOFF IYATSE, LIRS Assistant Director in charge of information technology (IT), Rasheed Olu-Ajayi, spoke on the migration process, efficiency of the new platform and benefits to taxpayers.

What is the justification for the decision to migrate to the eTax platform?
The eTax application is one of the latest revolutionary technologies the agency has introduced in Lagos State. It is meant to replace the legacy application system, EBS-RCM. The eTax application is end-to-end tax administration software that allows us to digitise and automate all our tax processes, from enumeration, registration, payment, and audit to filing of annual returns. It is also used for assessment by taxpayers and, more importantly, enables them to interact with us. Essentially, it is an end-to-end tax administration’s software that serves all agents.

Was anything wrong with the EBS-RCM?
There was nothing wrong with the old system. We had to move with the trend. If you look at the ease of doing business ranking, tax administration is a major assessment parameter. Lagos State has always been a reference point on how Nigeria can increase its ranking in the ease of doing business. If Lagos is a reference, we therefore need to consistently enhance our processes through automation.

Secondly, we also looked at the legacy application that we were using and noticed that a lot of taxpayers used multiple identities. So, we need to be able to uniquely identify every taxpayer within the tax net, which was why we were using things like Bank Verification Number (BVN) and National Identity Number (NIN) to identify each taxpayer. eTax is more efficient in uniquely identifying each of the taxpayers.

Does the new platform help to address multiple identity challenges?
Yes. With eTax, we are able to uniquely identify every taxpayer in the tax net. That means no taxpayer has multiple IDs on the new application. With the new administration, tax officers are able to match taxpayer IDs and harmonise where there are duplications.

Do you create new IDs where there are multiplicities?
It is not about creating a new ID for them. It is actually merging the multiple IDs into one. The taxpayer keeps one while the other ones are jettisoned. But the transactions on the IDs that are abandoned are moved to the new obligation.

What are the benefits of eTax for taxpayers?
With the eTax application, a taxpayer could, from the comfort of their own homes, carry out necessary actions because it is an online application. They only need to login with their payer IDs and passwords to do their filings, assessments, objections and make payment. So, in terms of simplicity, it helps us to comply with one of the core principles of taxation, which is convenience. A taxpayer does not need to visit a tax station to carry out anything.

Essentially, the benefits are in two categories. For the agency, it reduces the cost of collection. It has blocked revenue leakages within the system. It has reduced instances of tax evasion and avoidance to the barest minimum. Of course, it has helped to improve our services.

It has reduced the cost of compliance for taxpayers. Before now, for the taxpayers to object to a tax assessment, they would need to do photocopies and visit the tax office. But the new platform is fully technology-driven. A taxpayer can sit down at the comfort of their homes to do everything. They just need to login into their profiles, raise objections and we will see all the documentation needed to treat such objections. In terms of being able to go around the streets of Lagos and getting stuck in traffic for tax purposes, this is a real benefit.

It also increases accountability. An employee can check their profiles to see how taxes deducted from their salaries are remitted. A taxpayer even gets a notification once their employers remit taxes deducted from their salaries. So, it shows accountability and transparency.

What is the level of compliance since the migration was announced?
Compliance has been very high. We have about three million taxpayers registered on that platform. But when we look at the population of the state and suggest that about 50 per cent of the population pay taxes, we should have about 10 million people registered on the platform. That means we still have a deficit of about seven million that should come on the platform. The agency is doing its best to educate people on taxation and create more awareness. More people need to do their civic responsibilities and get into the tax net.

Who is eligible to register on the platform?
It is about people who earn income either as an individual or a corporate entity. Any individual or corporate entity who has an income at the end of a month is eligible to pay taxes and should be on the platform.

Previously, you would need a bank teller to pay tax. What we’re doing now is digitising the teller, which is what we call a bill reference. For you to be able to make payment, you upload a schedule online. You will require a username and password once you log into the platform. On the left pane of the application, you will see a module called payment. If you click on that, there’s a sub-menu called bill generation. Once you click on that, you will be able to input the agency code, the revenue code and then upload the schedule. Then, a pop-up box comes up to ask you to verify if the amount you want to pay is correct. Once you confirm, a bill would have been generated. Then, you can proceed to a payment channel with that bill to make that payment.

How does a taxpayer collect ID?
Collecting taxpayer ID is quite simple. For anyone who needs to collect the payer ID they need to register on the LIRS portal to make an application. To be able to register, you need to have a unique ID with either a BVN or NIN.