LIRS:Lagos State Government Tasks Business Organisations On Consumption Tax Compliance

By Lateef Adegbite and Elizabeth Chukwuma

This is not the best of times Owners of Hotels, restaurants and events centres operating   in Lagos, the nation’s most populous Commercial nerve centre as the Management of Lagos Inland Revenue Services, LIS, which have the backing of Babajide Sanwo-Olu, the state governor appears to be on the neck of the business Organisations over consumption tax compliance.

There are fears in both official and unofficial circles that, in spite of the fact that Hotels, restaurants and Business centre owners would lose may customers in Lagos, the nation’s commercial nerve centre and its environs , the brewing Companies operating may not be left out.  The roll call, Guinease Nigeria plc, 7-UP Bottling Company, Life Breweries Company ltd, Sona Breweries plc, Associated Breweries&Company ltd, Consolidated Breweries ltd, Indulge Breweries ltd, West African Breweries Ltd, and Nigerian Breweries plc, among others may witness a drop in patronage as a result of the newly introduced 5% consumption tax on taxable goods and services. Already, prices of beers and beverages including soft drinks have gone up.

 At the instance of Sanwo-Olu, the incumbent Lagos state governor, who had served in the then the state governor,administration of Bola Ahmed Tinubu, now President of the Federal Republic of Nigeria alongside the likes Olayemi Michael Cardaso,  Commissioner, Economic Planning and Budget  and now governor of  Central Bank of Nigeria, believed to be instrumental for the tax reforms in the state, appears to be tapping all avenues of internal revenue generation  in the state, particular, consumption tax compliance.

This is may have informed why Jimi Aina, Director, LIRS, has urged owners of Hotels, restaurants and events centres, that dotted the nooks and crannies of the state ‘’to contribute’’ to the state’s development  by prioritizing  the monthly collection  and remittance of a five percent  consumption  tax  on all consumables  and personal services’’.

Appearing  on the Tax  programme on TVC,  on Wednesday, September, September 27, 2023, monitored by The Value News Correspondent  online in Lagos, Aina, the LIRS, Director, who could not hide  his feelings that the government is in dare of funds to execute major road , flyover and other infrastructural facilities projects in a state, where NOVA Merchant Bank Nigeria Limited,  had saved  50 child patients trough surgical intervention in collaboration in collaboration with Association of  Paediatric Surgery Operators of Nigeria, APSON  and Lagos state Teaching Hospital, LASUTH, had said to those that cares to listen that ‘’ consumption tax is a major source of  for  the Lagos state government ‘’.

He was emphatic that the government uses the funds ‘’ to provide public amenities and services such as healtcare , education transportation  and security equipment  to assist other security agencies, particular, the state police Command .  This may have informed why he had said that the owners of Htels, restaurants and event centres and other private Organisations operating in the state must register with the LIRS as collecting agents’’.

  As a prelude to collecting the five percent consumption tax from the Hotels, restaurants and events centres in Lagos, Babatunde Fashola, SAN and a former governor of the state and the immediate past minister of Works and Housing had   on June 22, 2009, had enacted the Hotel occupancy and restaurant consumption Law of Lagos state, popular Hotel, Consumption Law which was said to have imposed Consumption at 5% on the value of gods  and services consumed in hotels, restaurants and event centres with the south western state.

LIRS, 5% Consumption Forces Prices Of Drinks Go Up

AGiven a insider information, Aina, LIRS, Director, had said that ‘’the tax base is the total cost of facilities, consumables and personal services applied to consumer in, by or on behalf of the hotel, restaurant or events centre.

Describing the consumption tax as a major source of revenue generation for the state, the LIRS, Director, who could not hide his feelings  at a recent appearance of the Tax Talk Programme  anchored on TVC ,  disclosed that ‘’the Lagos state government uses the funds  to provide  public amenities  and services  such healthcare, education, transportation and provision of security equipment and to strengthen security in the state. This may have informed why the state government had sounded it loud and clear that  ‘’owners of hotels, restaurants operating in nooks and crannies of the state  must register with the LIRS as collecting agents.

The LIRS, Director, may have gladdened the heart of residents of Lagosian when he noted that contrarary to the misconception people have about the consumption tax that that the Sanwo-Olu led All Progressive Congress, APC, government in the state has not imposed additional taxes on hotels, restaurants and events centres.

He may have cleared the air when he averred that ‘’consumers who purchase taxable goods and services in the state should consider themselves as responsible for paying the consumption tax. ‘’The tax, according to him is already included in the price of the goods and services and is paid to the collecting agent who collects it on behalf of the Lagos State government.

In spite of efforts by the LIRS, Chief Executive Officer, CEO, to convince Lagosians that there is no ulterior motive behind the introduction and collection of the Consumption tax on taxable goods and serves in the state , many still misunderstood the concept  of the consumption tax , describing  it as additional burden  on hotels, restaurants and event centres in the state .Entertainment analysts  noted that in reality , it is the socialites who are taxed  when they  hang out,  attend events  and have drinks at a bar.

Despite people’s mis consumption of the 5% Consumption tax on taxable goods and service, Aina , the LIRS, helms , who insists that that  the tax has come to stay had said that  by paying  the tax, ‘’consumers  contribute  to the development and maintenance  of the basic infrastructural facilities  and services in the state.

Section  of the Lagos state Consumption tax  as sighted by The Value News  online Magazine  defined the  the consumption tax  as tax ‘’on the supply of  goods and services  in Lagos state which is charged  and payable by the consumer’’.

There is no gainsaying the fact that consumers who purchase taxable goods and services in the one of the most populous states in Nigeria are the ones responsible ‘’for the consumption tax’’. Note that ‘’the tax is included in the price of the goods and services and is paid to the collecting agent who collects it on behalf of  the state government.

Recall that Aina, the LIRS, Director, had repeated made it clear that owners of hotels, restaurants and event centres have the responsibility of collecting these consumption taxes from consumers and remitting it to the LIRS, insisting that the collecting agents must ensure they factor in the deadline for remittances to avoid been sanctioned.

Going by the provisions of the Lagos state Consumption tax Law, the remittances by the collecting agents to the LIRS, must be made not later than the 20th day of the moth following the moth of collection. Take for instance, the consumption tax collected from the consumers by the collecting agents must be remitted to the Lagos state tax collecting agency, LIRS, on or before the 20th of October, 2023.

Informed sources told The online Magazine that the leal implication s to non-remittances when the date s due, the LIRS Authorities may be forced to take an estimate of the total amount due and such estimate shall become due not later 21 days of service of such notice.

The lLIRS Authorities may have made matters worse for the consumption tax collecting agents when it declared that ‘’failure by ant of the collecting agents to remit the collected consumption tax within the stipulated time frame will attract a penalty of 10% of amount not remitted plus interest at 5% above the prevailing Monetary Policy of Olayemi Michael Cardaso led Central Bank of Nigeria, CBN.

Aina , the LIRS, Director, may have hit the nail on the head when he stated  that the c collecting agent  may also be made  to face  severe  sanctions such as’’ closure of business and prosecution’’.

Given the situation in the past where there had been arguments and counter -arguments over the issue of remittances of consumption taxes to the LIRS, in the past, this time around, every collecting agent is required ‘’to keep, maintain and preserve such records, books and accounts in respect of all transactions chargeable under the Law as hotels, restaurants, events centres and other businesses affected by the ne new tax Law.

In a related development.  Tokunbo Akande, the Special Adviser, to Ayodele Subair the Executive Chairman, of LIRS, had made residents and business owners in Lagos state to know that there is a difference between‘’ Stamp duty, which is revenue stamp and postage stamp as.

He noted that stamp duty is not just for courier services as it is meant to certify the underlying

transaction between two entities, whether they are appropriate entities or individuals.  He opined that the ramework  for stamp duty  is ‘’to clarify  the documents  for underlying transactions  and ensure  that  they are  possible  in Court  in case  any disputes arise.

According to him stamp duty that dates back to 1939, during the colonial era, is still in effect today. He had said that that though, it was enacted in 2004, by the former administration of Tinubu in the state but it had been updated at various times by his successors through the Finance Act but the basic premises for the enactment of the Law remains the same.

Tamp duty, the Special Adviser had said places the responsibility on those involves in certain transactions to provide documentation that explains the details of the transactions. Akande may have spoken the LIRS, Director, when he revealed that stamp duty alone, has contributed significantly to revenue generation in Lagos state. He had said that that the state had generated over N5 million from stamp duty over the past few years, noting that ‘’there is still room for improvement’’.

He may have shocked resident of Lagos state when he volunteered information that that the LIRS is considering the introduction of revenue stamps for wholesalers and distributors for receipts over N10.000.00 I the state. He had alluded to the fact that that the approach was previously utilised in the state in 1970s but dropped.  ‘’We are ready to revitalise it by transitioning from manual to electronic processes’’. Had said.   

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