Travellers to Lagos will pay an extra 5% on their hotel and restaurant bills.
Following a court ruling in favour of the Hotel Occupancy and Restaurant Consumption Law 2009, a 5% Consumption Tax will be charged on hotel guests’ bills in the Lagos State on top of 5% VAT and service charges that already exist.
Debates around the law were laid to rest on July 19 when Nigeria’s Supreme Court ruled in favour of Lagos State, allowing it to impose a 5% tax on the consumption of goods and services in hotels, hotel facilities, event centres and restaurants.
The extra tax could push accommodation rates up an extra R200 on a US$387 (R3 989) room per night, including VAT and service charges.
The Hotel & Personal Services Employers’ Association of Nigeria (Hopesea) has been battling the tax imposition in court, with some of its members viewing it as double taxation because of the existing 5% VAT. However, due to the July 19 court ruling, Hopesea says in a statement that the Lagos State government is threatening to shut down hotels if they do not start implementing the tax.
Southern Sun Ikoyi Hotel will introduce the tax on November 15, on top of its 5% VAT charges and 10% service charges. “This is a Lagos state government tax for all hotels, not only Southern Sun Ikoyi. We have already advised our clients,” says md Offshore at Tsogo Sun Richard Weilers.
Spokesperson for Travel Vision, David Bradshaw, says: “Nigeria is a business not a tourist destination so if business people need to go there, then it’s a fait accompli.”
Some hotels have charged the tax since 2009. Sun International, which owns the Federal Palace Hotel, for example, has charged Consumption Tax since the opening of the casino in 2009 and thus has not seen any noticeable impact.
Radisson Blu Anchorage Hotel Lagos VI has charged the tax since it opened in 2011. GM Stanislav Kondov says guests pay higher rates as a result. “The hotels recover the tax from the guests, so it’s the guests who lose the money. Hotel rates are higher because of the tax and we can’t see what the funds are used for.”
