Concerns are mounting among Nigerians following a notice by the Lagos Internal Revenue Service (LIRS) indicating that tax authorities may debit personal bank accounts to recover unpaid taxes.
The notice cited Section 60 of the Nigeria Tax Administration Act, which empowers tax authorities to recover outstanding tax liabilities through a direct debit mechanism known as “substitution.” Neither the Federal Inland Revenue Service nor the Presidential Fiscal Policy and Tax Reforms Committee has publicly debunked the notice.
Reacting to growing public anxiety, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, clarified via his X handle that the power of substitution is a last-resort recovery tool. According to him, it applies only to final and established tax liabilities and can only be exercised after all legal and administrative processes, including court appeals, have been exhausted. He stressed that the process is governed by due process and is neither arbitrary nor discretionary.
Despite the clarification, economists and financial experts have raised serious concerns over conflicting interpretations of the law. The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said the policy requires clearer communication to prevent fear and confusion. He warned that apprehension over possible account debits has already triggered panic withdrawals, undermining confidence in the banking system.
Yusuf also questioned the ownership of funds in bank accounts, noting that deposits may belong to third parties such as contractors or suppliers. He argued that such enforcement measures should only occur with explicit court orders.
Similarly, former President of the Chartered Institute of Bankers of Nigeria, Mazi Okechukwu Unegbu, described the move as dangerous, warning that it could create long-term instability in the financial system. Both experts urged authorities to manage tax reforms carefully to protect public trust and financial stability.
