Africa: Hotel Association directs members to remit consumption tax to Lagos state government
Hotel Owners And Managers Association of Lagos state, the umbrella body of hotel operators in the state, has issued a directive to all its members to henceforth collect and remit the Hotel Occupancy Restaurant Consumption tax to the Lagos State Government in obedience to a recent court judgement.
The body also directed its members to stop charging Value Added Tax, VAT in a bid to forestall the issue of double taxation.
According to a paid advertisement issued by the Director-General of the Association, A. A Ologun to its member, the association said its decision was informed by a recent court ruling which affirmed that the only level of government that is constitutionally empowered to impose and collect taxes on goods and services consumed in Hotels, Restaurants, and allied businesses within its jurisdiction is the state government.
The statement read in part, “We wish to confirm the highlights of the judgment as follows;
• That the VAT Act is inconsistent with the relevant provision of the constitution of the Federal Republic of Nigeria
• That the only level of government that is constitutionally empowered to impose and collect tax on goods and services consumed in Hotels, Restaurants, and allied businesses is the state government.
• That the Lagos State’s Hotel Occupancy and Restaurant Consumption Law is valid
• That the Federal Inland Revenue Service, FIRS is perpetually stopped from enforcing the provisions of VAT Act for goods and services consumed in hotels.
In view of the above, we hereby urge all our members to obey the judgment and continue to collect and remit the Hotel Occupancy and Restaurant Consumption Law to the Lagos State Internal Revenue Service, LIRS and cease forthwith the implementation of VAT in their different establishment.”
TCN had earlier reported that a Federal High Court sitting in Lagos had on October 3rd ruled that all hotels, restaurants and relaxation centers must henceforth remit consumption tax to the coffers of the Lagos State government.
In the judgment delivered by Justice Aikwa J, the Court dismissed the originating summons instituted by the hoteliers and resolved all the questions and reliefs in favor of the Lagos State Government.
Delivering the judgment, Aikwa held that consumption tax is not stated in either the exclusive and concurrent legislative list in the Constitution of Nigeria. As a result, the absence of consumption tax on the concurrent and exclusive lists, puts it on the residual list which is within the legislative competence of State Governments.
The court further held that the provisions of the Value Added Tax, VAT Act relating to consumption tax are inconsistent with the Nigerian constitution. As such, the Minister of Finance has corrected the anomaly by including consumption tax in the list of taxes collectible by State Government. Thus, the responsibility for collecting consumption tax lies on the State Government.
by Olamilekan Okeowo