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The short answer
Tenement rates on Nigerian business premises are a local government charge set under each state's rating law, while Lagos uses a single state Land Use Charge, which falls on the owner whether the property is let or not. The charge is a percentage of assessed value, so check the demand notice and your lease before paying.
If you own or rent a shop, office, warehouse or workshop in Nigeria, the property itself can attract an annual charge separate from income tax. In most states this is a tenement rate collected by the local government. Lagos charges a state Land Use Charge on property under its own law. Who pays depends on the law of the state and on your lease, and the most common mistake is a tenant paying a bill that the owner was liable for, or the reverse.
Tenement rates: a local government charge
The Taxes and Levies (Approved List for Collection) Act sets out which level of government may collect which taxes. Its list for local governments includes tenement rates and shops and kiosks rates, alongside items such as signboard permits and refuse disposal fees. PwC's Nigeria summary (reviewed 29 May 2026) likewise notes that tenement rates are chargeable by state and local government authorities, with rates varying by state and by location within a state.
Tenement rates are set under each state's rating law and collected by the local government council, so the amount, the payment window and any discount for early payment are on the council's demand notice, not in a national rule. Section 2 of the Approved List Act says only the appropriate tax authority may collect a listed tax, and it bars roadblocks for collection. We could not confirm whether the list has been revised following the 2025 tax laws.
Who pays a tenement rate
State rating laws decide whether the owner or the occupier is liable, and many leases move the cost by agreement. Before paying, check three things:
- Whose name is on the demand notice: the owner, the occupier, or simply the property address.
- What your lease says about rates and outgoings.
- Whether the notice comes from the local government that actually covers your address.
Lagos: the Land Use Charge
In Lagos the main annual property charge is the Land Use Charge, set by a state law and paid to the state through Lagos Internal Revenue Service channels, according to Ownkey's 2026 guide. Check with your local government whether any separate local rate also applies to your premises.
Who pays in Lagos
Ownkey's June 2026 guide says the Land Use Charge is payable by the owner, whether the property is let or owner-occupied. Nairametrics' summary of the 2020 amendment says section 14 of the law allows an occupier to be appointed as the owner's agent for collection. In practice, a tenant may receive the bill or be asked to pay it, but unless the lease says otherwise the liability is the owner's, so a tenant asked to pay should get legal advice on recovering the amount before deducting anything from rent.
How it is assessed
The bill is a percentage of the assessed value of the property, with a lower rate for owner-occupied homes. As reported by Nairametrics in August 2020 for the 2020 amendment:
| Property category | Annual rate (as reported, Aug 2020) |
|---|---|
| Owner-occupied residential | 0.0394% of assessed value |
| Residential not owner-occupied, and commercial | 0.394% of assessed value |
Business premises usually fall in the commercial band. The same report described a 15% discount for early payment and exemptions such as for some pensioners. These are 2020 figures; Lagos can change rates and discounts by law, so check the current bill and LIRS guidance before you budget. Ownkey lists payment through the LIRS portal, Remita with a payment reference, banks with the demand notice, or at Revenue House in Alausa, and says to keep the official LIRS receipt.
Worked example (illustrative, 2020 rate)
A shop in Lagos with an assessed value of ₦50,000,000 in the commercial band would, at the 0.394% rate reported in 2020, carry a yearly charge of 0.394% × ₦50,000,000 = ₦197,000. With the 15% early-payment discount the owner would pay ₦197,000 − ₦29,550 = ₦167,450. The actual assessed value and rate are on the demand notice.
Other states
Outside Lagos, expect a local government tenement or shops rate, set under the state's rating law, and possibly other state charges on the land. PwC lists Right of Occupancy fees and governor's consent fees among state property charges. Because the details differ, ask the local government revenue office for the rate schedule and the legal basis, and get an official receipt. For Abuja premises, see finding business premises in Abuja.
What to check first
- Read the rates clause in your lease before you sign or renew. See renting a shop or office in Lagos.
- Match the bill's address, owner name and assessed value to the property.
- Pay only through official channels and keep receipts for at least six years for your tax records.
- Question any collector without a demand notice; see illegal levies in Lagos.
- For Lagos payment steps, read the Lagos Land Use Charge guide.
Where Pryme fits
Paying a property bill from a Pryme Business Account leaves a clear record, and a verifiable receipt generated through VerifyDoc.ai (receipts) lets a landlord or tenant check the payment is genuine if you later need to recover the cost.
Questions people ask
Who pays land use charge in Lagos, landlord or tenant?
The owner is liable, whether the property is let or owner-occupied, according to Ownkey's 2026 guide. The law allows an occupier to be appointed as the owner's agent to collect it, and the lease may move the cost.
Is tenement rate the same as land use charge?
No. A tenement rate is a local government charge on the approved list. The Land Use Charge is a Lagos State charge under its own law. Check with your local government whether any separate rate also applies in Lagos.
How is Lagos land use charge calculated for a shop?
It is a percentage of the assessed property value. Nairametrics reported 0.394% a year for commercial property under the 2020 amendment; check the current bill for today's rate.
Can a local government collect tenement rates?
Yes. Tenement rates and shops and kiosks rates are on the local government list in the Taxes and Levies (Approved List for Collection) Act.
Sources
- Taxes and Levies (Approved List for Collection) Act (PLAC Laws of Nigeria) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria corporate other taxes (reviewed 29 May 2026) · accessed Oct 2026
- Nairametrics: 4 key points in the new Lagos 2020 Land Use Charge (6 Aug 2020) · accessed Oct 2026
- Ownkey: Land Use Charge in Lagos guide (16 Jun 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.