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The short answer
Lagos State charges a 5% consumption tax on the value of goods and services consumed in hotels, restaurants and event centres under its Hotel Occupancy and Restaurant Consumption Law of 2009. The business collects it from customers as an agent of the Lagos State Internal Revenue Service and must remit it, with a monthly return, by the 20th day of the following month; it is separate from federal VAT, which stays at 7.5%.
The law and the rate
Lagos State's Hotel Occupancy and Restaurant Consumption Law was enacted on 22 June 2009. According to a Techeconomy report of a Lagos State Internal Revenue Service (LIRS) notice (October 2023), it imposes a 5% tax on the value of goods and services consumed in hotels, restaurants and event centres in Lagos. The tax base is the total charged for facilities, consumables or personal services supplied in, by or on behalf of the business.
In everyday terms, it applies to:
- room charges at hotels and similar accommodation;
- food and drinks served in restaurants, bars and lounges;
- hall hire, catering and services at event centres.
The customer bears the tax. The business is a collecting agent: it adds the 5% to the bill (or includes it in the price) and pays it over to LIRS.
Who must register
Owners of hotels, restaurants and event centres in Lagos are required to register with LIRS as collecting agents, per the same report. If you run a shortlet, lounge, bar or catering-plus-venue business, check with LIRS whether your business falls within the law's definitions; the report does not list every category.
Filing and remittance
| Item | Rule (as reported, Oct 2023) |
|---|---|
| Rate | 5% of the value of goods and services consumed |
| Remittance deadline | 20th day of the following month (e.g. September collections by 20 October) |
| Monthly return | Form UCL 2: total chargeable payments, tax collected, other information LIRS requires |
| Late remittance | 10% penalty on the unremitted amount, plus interest at 5% above the CBN Monetary Policy Rate |
| No return or under-declaration | LIRS may estimate the amount due, payable within 21 days of notice |
| Persistent default | Possible closure of premises and prosecution |
Check the current form and payment channels on LIRS's own platforms before filing; procedures may have moved online since the 2023 notice. LIRS's eTax portal (etax.lirs.net) is used for state taxes such as PAYE, as TechCabal reported in April 2026, and taxpayer IDs there carry an N- or C- prefix.
Worked example: one restaurant bill
- Food and drinks
- ₦40,000
- Lagos consumption tax at 5%
- ₦2,000
- VAT at 7.5%
- ₦3,000
- Total bill
- ₦45,000
Monthly: if the restaurant's chargeable sales for September were ₦6,000,000, consumption tax collected would be ₦300,000, due to LIRS by 20 October. If it paid late, the penalty would be 10% of the unremitted amount (₦30,000) plus interest.
The VAT overlap
VAT is a federal tax administered by the Nigeria Revenue Service (NRS), and stays at 7.5% under the Nigeria Tax Act 2025 (Forvis Mazars, March 2026). The Lagos consumption tax is a state tax administered by LIRS. They are separate laws, with separate returns and deadlines: VAT returns by the 21st of the following month (Nigeria Tax Administration Act 2025, s.22(1)), consumption tax by the 20th.
The LIRS notice we reviewed does not address VAT, and we have not found an official joint position on how the two interact for a single bill. Practical points:
- A small business under the NTAA (turnover ₦100 million or less, fixed assets ₦250 million or less) is exempt from VAT registration and charging, but that exemption does not remove a state consumption tax.
- Show each tax as its own line on the bill, so the customer and the auditor can see what was charged.
- Do not net one tax against the other; each goes to a different authority.
- Take professional advice if you have been assessed for both on the same base and believe one does not apply.
Other Lagos obligations for hospitality businesses
Hospitality businesses also run PAYE on staff through LIRS and pay any premises-related charges. See land use charge and tenement rates and raising weekday hotel occupancy for the commercial side.
What to check first if you are opening in Lagos
- Confirm with LIRS whether your business type is covered and register as a collecting agent before you open.
- Set your menu and room prices to show whether the 5% is included or added, and print it as a separate line on bills.
- Set up a monthly routine: total chargeable sales, compute 5%, file the return and pay by the 20th.
- Work out whether you are above the federal VAT small-business threshold; if so, register with the NRS separately.
- Keep every bill, the monthly return and the payment evidence for at least six years after the year of assessment (Nigeria Tax Administration Act 2025, s.31).
- Keep consumption tax collected in a separate account so it is not spent on operations.
Consumption tax collected is the customer's tax held on the state's behalf, not part of your revenue; late remittance attracts the 10% penalty plus interest described above.
Where Pryme fits
Eateries and restaurants, and hotels and shortlets, are sectors in Spaces; a Lagos business with a Pryme Business Account can join. Using bank-transfer checkout gives you a clean record of each bill for the monthly return. This article is information, not tax advice.
Questions people ask
What is the consumption tax rate in Lagos?
5% of the value of goods and services consumed in hotels, restaurants and event centres, under the Hotel Occupancy and Restaurant Consumption Law 2009.
When is Lagos consumption tax due?
By the 20th day of the month after collection, with a monthly return on Form UCL 2, as reported from an LIRS notice.
Do restaurants in Lagos charge both VAT and consumption tax?
They are separate taxes: VAT (7.5%, federal) and consumption tax (5%, Lagos). A VAT-registered restaurant may show both; small businesses are exempt from VAT but not from the state tax. Seek advice on disputed overlaps.
What is the penalty for late consumption tax in Lagos?
10% of the unremitted amount plus interest at 5% above the CBN Monetary Policy Rate, as reported from the LIRS notice.
Sources
- Techeconomy: LIRS tasks businesses on 5% consumption tax compliance (1 Oct 2023) · accessed Oct 2026
- Forvis Mazars: 2025 NTA VAT key business changes (16 Mar 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- TechCabal: How to file tax on the LIRS eTax portal (2 Apr 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025, ss.22 and 147 (NRS-published text, edited 1 Jan 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.