Lagos hotel and restaurant consumption tax
Which Lagos businesses collect the 5% hotel occupancy and restaurant consumption tax, on what part of the bill, and how and when it is paid to the State.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
A guest settles a bill at a Lekki restaurant and finds three extra lines below the food and drinks: VAT, a service charge, and something marked "consumption tax". To the guest it is all part of the price. To the restaurant, each line is a different obligation, owed to a different authority, on a different base and by a different date.
The consumption tax line is the one Lagos hospitality businesses most often handle loosely, because it is a State charge sitting beside a federal one. This article explains who collects the Lagos hotel occupancy and restaurant consumption tax, how it is calculated, when it must be paid over, and how to keep it straight in your books.
Who collects it
The LIRS Tax Types page says the Lagos hotel occupancy and restaurant consumption tax applies to goods and services consumed in hotels, bars, restaurants and event centres in Lagos State. The businesses collect it from customers and remit it to the Lagos State Internal Revenue Service (LIRS). It rests on the Lagos Hotel Occupancy and Restaurant Consumption Law of 2009, which the LIRS FAQs say took effect on 1 August 2009.
So an event centre that hosts weddings, a lounge, a guest house and a hotel restaurant are all inside it. The business is a collector: the tax is the customer's, held by the business until it is paid over.
Charged on the bill, excluding VAT and service charge
The LIRS says the tax is charged at 5% of the total bill issued to customers, excluding VAT and service charge. The LIRS FAQs give the same 5% rate.
That exclusion matters for the arithmetic. Take a bill in words: the food and drinks come to a certain amount; VAT and a service charge are added. The consumption tax is 5% of the food-and-drinks amount only, not of the total after VAT and service charge have been added. Working it out on the grand total overcharges the customer and over-reports what you owe.
VAT is a separate matter. Under the Nigeria Tax Act, 2025, VAT is charged at 7.5% on the value of taxable supplies, and the NRS says the standard rate is 7.5%, with certain goods and services zero-rated or exempt. VAT goes to the NRS; consumption tax goes to Lagos. The LIRS lists the consumption tax, with its rate and base, on its tax types page.
Paid to a designated bank by the 20th
The LIRS FAQs say consumption tax collected during a month must be paid to a Lagos State Government designated revenue collecting bank on or before the 20th day of the following month. Evidence of remittance is then forwarded to the office of the Executive Chairman of the LIRS.
Two steps, then: pay through a designated bank, and send the proof to the LIRS. A business that pays but does not forward the evidence has done half the job.
Late penalties
The LIRS FAQs say late filing or remittance attracts a 10% penalty plus interest at 5% per annum above the CBN Minimum Rediscount Rate. Because the tax is collected from customers in the first place, a late remittance is hard to excuse: the money was in the till.
Recording it in Achekam: VAT codes do not cover it
Achekam's invoices handle VAT through tax codes. A Nigerian business picks a tax code on each invoice line (standard, zero-rated, exempt, out of scope or reverse charge), and only standard lines carry VAT, at the approved rate for the country. There is no tax code for the Lagos consumption tax, so it cannot be added to an invoice as a tax line.
The practical approach is to treat it as a liability you track yourself:
- A liability account. Each business in Achekam has its own double-entry ledger with a standard chart of accounts, and accounts can be added or renamed. Add an account such as "Lagos consumption tax payable".
- A monthly journal. A business can post manual journals; an unbalanced journal or one dated in a closed month is refused, and a posted journal is corrected only by a reversal. At month end, journal the consumption tax collected, worked out at 5% of the month's bills before VAT and service charge, out of sales and into the liability account.
- The payment. When you pay the designated bank, the payment clears the liability account.
Achekam lists every State Internal Revenue Service but leaves every State filing and payment to the State's own channel, so the remittance and the evidence to the LIRS are done outside Achekam. What the books give you is a clean record of what was collected and what was paid. The invoice details themselves are covered in what a Nigerian VAT invoice must show, and the State-versus-federal question for withholding in withholding tax, State or NRS.
A monthly consumption tax routine
- Total the month's bills before VAT and service charge.
- Work out 5% of that total.
- Check it against the consumption tax shown on the bills; investigate any difference.
- Post the journal moving it to the liability account.
- Pay the designated bank on or before the 20th of the following month.
- Send the evidence of payment to the LIRS Executive Chairman's office, and keep a copy.
- Confirm the liability account is back to nil after payment.
Run the routine in the first week of each month, while the bills are fresh, and the 20th will never be a scramble.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
