Business News

Revenue: LIRS intensifies efforts in consumption tax collection from businesses

The Lagos State Internal Revenue Service (LIRS) is encouraging restaurant, hotel, and event centre owners in the state to support its development efforts by ensuring the prompt collection and remittance of a 5% consumption tax on all consumables and personal services each month.

The Hotel Occupancy and Restaurant Consumption Law, colloquially referred to as the Hotel Consumption Law, was instituted by the State on June 22, 2009.

Under this law, a consumption tax of 5% is imposed on the value of goods and services consumed in hotels, restaurants, and event centres within the state.

The tax base encompasses the overall expenses associated with the facilities, consumables, or personal services furnished to a patron within, through, or on behalf of the hotel, restaurant, or event centre.

Director of New Growth at LIRS, Jimi Aina, speaking on the new Tax Talk program, emphasized the significance of consumption tax as a primary revenue source for the State Government.

He also underscored the obligation of restaurant, hotel, and event centre owners to register with LIRS as collecting agents.

Aina clarified that there is a prevailing misconception about consumption tax. Contrary to belief, the state has not introduced any extra taxes on establishments like restaurants, hotels, and event centres.

Rather, consumers are accountable for paying the consumption tax when they purchase taxable goods or services within the state.

This tax is already factored into the price and is collected by agents authorized by the Lagos State Government.

He said:

Speaking further, the New Growth Director pointed out that agents, including restaurants, hotels, and event centres, have a vital role in collecting taxes from consumers and forwarding them to the LIRS. It is equally important for them to be aware of and adhere to the specified deadline for tax remittances.

According to him, the Lagos state consumption tax law makes it compulsory that the remittances must be made not later than the 20th day of the month following the month of collection.

Aina observed that when collecting agents fail to remit the consumption tax, they’ve collected from consumers to the LIRS within the specified timeframe, there are legal consequences.