Lagos State Government has imposed what it called “5 Percent consumption tax on people who patronize hotels, restaurants, event centres and others.
In a statement today September 28, the State’s
Internal Revenue Service (LIRS), advised owners of restaurants, hotels, and event centres operating in the state to contribute to the state’s development by prioritizing the monthly collection and remittance of a 5 percent consumption tax on all consumables and personal services.
The State Government, on June 22, 2009, enacted the Hotel Occupancy and Restaurant Consumption Law of Lagos State, otherwise called Hotel Consumption Law, which imposes consumption tax at 5 percent on the value of goods and services consumed in hotels, restaurants and event centers within the state. The tax base is the total cost of facilities, consumables or personal services supplied to a consumer in, by or on behalf of the hotel, restaurant or events centre.
Speaking on The Tax Talk programme, monitored on TVC, the Director, New Growth of the LIRS,
Jimi Aina, said that while the consumption tax is a major source of revenue for the State Government, owners of restaurants, hotels, event centres, etc are obligated to register with the LIRS as collecting agents
He said that the tax would provide the State Government enough funds to provide public amenities and services, such as healthcare, education, transportation and security, .
Aina submitted that contrary to the misconception a lot of people have about consumption tax, the state has not imposed additional taxes on restaurants, hotels and event centres, rather, consumers who purchase taxable goods or services in the state are responsible for paying the consumption tax.
The tax is already included in the price of the goods or services and is paid to the collecting agent who collects it on behalf of the Lagos State Government.
“Many people misunderstand the concept of consumption tax. It is often thought that this tax is an additional burden on hotels and restaurants, but this is not the case. In reality, it is the customers who are taxed when they dine out, attend events, or have drinks at a bar. The tax rate is five per cent. By paying the consumption tax, consumers contribute to the development and maintenance of these amenities and services.”
“According to Section 1 of the Lagos State Consumption Tax Law, consumption tax is defined as a tax on the supply of goods and services in Lagos State, which is charged and payable by the consumer.
“Consumers who purchase taxable goods or services in Lagos State are responsible for paying consumption tax. The tax is included in the price of the goods or services and is paid to the collecting agent who collects it on behalf of the Lagos State Government,l.”
The New Growth Director said that while collecting agents (restaurants, hotels and event centres) have the responsibility of collecting these taxes from consumers and remitting to the LIRS, it’s also important to factor in the deadline for remittances.
“According to the Lagos state consumption tax law, the remittances must be made not later than the 20th day of the month following the month of collection. For example, consumption tax collected in September must be remitted to the LIRS on or before the 20th of October.
Aina noted that there are legal implications to non-remittances by collecting agents who failed to remit consumption tax collected from consumers to the LIRS within the prescribed time.
“Where a Collecting Agent fails to make a return or remittances as and when due, LIRS may make an estimate of the total amount due and such estimate shall become due not later than 21 days of service of such a notice.
“Failure to remit the tax collected within the stipulated time will attract a 10% penalty of an amount not remitted plus interest at 5% above the prevailing Monetary Policy Rate of CBN of Nigeria. Such collecting agent may also face sanctions including closure of business and prosecution.”

The creator of Blue Economy, Professor Gunter Pauli has painted a good picture of how the new ministry of Marine and Blue Economy can move fast to create abundant job opportunities for Nigerians and create wealth for the country.
Professor Pauli, who arrived in Nigeria today, September 28, and visited the Ministry, told the minister,Adegboyega Oyetola, that in six months, the ministry can facilitate the creation of a hundreds of thousand jobs by exploiting opportunities provided by the blue economy.
He listed shipping, paper conversion from wastes and maggot farming for poultry and fishing as low hanging fruits the ministry should embrace to create jobs and wealth.
He said that the ministry is overdue, considering the abundant opportunities in Nigeria, but warned that government must aggressively seek private sector investments for the new policy to bear fruits.
This was as the Minister expressed happiness on the interest shown by Professor Pauli in assisting Nigeria to tap its idle capacity from the oceans and the blue economy.
He promised to work with private investors in opening up the sector.
“I want to say that it’s not by accident that this ministry was created. It was part of the economic diversification policy of our country. We believed so much in oil but we now realize that 70% or so of the resources available actually come from the ocean and we have it in abundance here but neglected it for long.
“I must commend the president for creating the ministry. I want to assure you that we are up to the task and I believe so much in the PPP arrangement because government has no business in business. Government should just provide the enabling environment for business to thrive.”
He disclosed that efforts have been stepped up to improve transportation infrastructure, including automation of port operations for efficiency and increase in revenue.
“We now have sufficient control over insecurity and I want to tell you that for the past two years there has been no record of piracy on our shores. That is re-assuring to investors. I also assure you that we are ready to collaborate with investors, we are willing and ready and we will support all the initiatives that will bring all this to reality.”