The Lagos State Internal Revenue Service (LIRS) has warned against artificial or fictitious transactions, which are carried out with the intent to reduce tax liabilities.
LIRS has now said such arrangements will be disregarded under the Nigeria Tax Administration Act (NTAA), 2025, and could expose culpable taxpayers to investigation and penalties.
This is contained in a public notice dated January 21, 2026, and sighted by our correspondent on the LIRS website on Sunday.
The notice, signed by Executive Chairman of LIRS, Mr. Ayodele Subair, stated that the directive applies to all taxpayers, including incorporated entities, partnerships, trusts, natural persons, and other stakeholders operating within Lagos State.
It read, “In line with the provisions of the newly gazetted tax laws, the Lagos State Internal Revenue Service (LIRS) hereby issues this Public Notice to inform all taxpayers, including incorporated entities, partnerships, trusts, natural persons, and other stakeholders of the treatment of artificial or fictitious transactions for tax purposes.
“This Notice is issued to ensure compliance with the legal framework and to promote transparency, accuracy, and fairness in tax administration within Lagos State.”
Citing Section 46 of the NTAA 2025, titled ‘Artificial Transactions’, the revenue service said: “The law provides that where the relevant tax authority is satisfied that any disposition or transaction is artificial or fictitious and has the effect of reducing tax liability, it may disregard such transaction or make necessary adjustments to counteract the reduction of tax. The taxpayer shall be assessed accordingly.
“Transactions between connected persons, such as related companies or persons, shall be deemed artificial or fictitious if, in the opinion of the relevant tax authority, they are not conducted at arm’s length—that is, not on terms that would reasonably be expected between independent persons dealing at arm’s length.
“Any person in respect of whom a direction is issued under this section shall be liable for the revised assessment and any additional tax arising therefrom and has a right of appeal against the assessment.”