Nigeria: VAT is principal tax on goods and services in hotels, restaurants and event centers (court decision)
VAT is principal tax on consumption of goods and services in Nigeria and supersedes any similar state law
Hotels, restaurants and event centers (court decision)
The Court of Appeal (Lagos) held that value added tax (VAT) is the principal tax on consumption of goods and services in Nigeria and thus supersedes any similar state law, including the Lagos State hotel occupancy and restaurant consumption law.
The case is: Attorney General of Lagos State & The Registered Trustees of Hotel Owners and Managers Association of Lagos v. Federal Inland Revenue Service
Summary
The Federal High Court sitting in Lagos previously held in this case that Lagos State was the only constitutional and lawful body empowered to assess, impose and collect tax from customers for goods and services consumed in hotels, restaurants and event centers in Lagos and therefore enjoined the Nigeria tax authority from implementing or enforcing VAT provisions on customers of hotels, restaurants and event centers in Lagos.
The Nigeria tax authority appealed, and the Court of Appeal overruled the decision of the Federal High Court and upheld the powers of the Nigeria tax authority to impose VAT on goods and services consumed in hotels, restaurants, event centers, and similar establishments in Nigeria. In addition, the Court of Appeal held that because the VAT law is a federal law, it prevails over similar state laws such as the Lagos State hotel occupancy and restaurant consumption law.
KPMG observation
Taxpayers hope that all states in Nigeria with consumption tax laws will follow the decision of the Court of Appeal and desist from further imposition of consumption tax alongside VAT in the hospitality sector.
Read an October 2022 report [PDF 1 MB] prepared by the KPMG member firm in Nigeria
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