Following the judgment of the Federal High Court sitting in Port Harcourt in Attorney-General of Rivers State v. FIRS & Attorney-General of the Federation affirming the exclusive legislative competence of states (rather than the Federal Government) on Value-Added Tax (VAT),2 some states have made swift moves to give effect to it. First, the Rivers State Government signed the Rivers State VAT Bill into law on 19th August 2021.3 The Lagos State Government has followed suit by passing the Lagos State VAT Law ("the Law" or "this Law") on 9th September 2021.4

Without a doubt, this Law will change the narrative of VAT administration in both Lagos State and Nigeria, if enacted. In this review we present a brief overview of the content of the new Law.

Highlights of the Lagos State VAT Law

The Lagos State Internal Revenue Service (LIRS) is empowered to administer VAT in Lagos State.5 The Law contains a single schedule and notably, the administration of VAT is expected to cover all such goods and services except those contained in the single schedule to the Law. Like those contained in the VAT Act,6 these goods and services are:7


  1. Non-oil exports;
  2. Goods purchased by diplomats; and
  3. Goods purchased for use in humanitarian donor funded projects. "Humanitarian donor funded projects" include projects undertaken by Non-Governmental Organizations, religious and social clubs or societies recognized by law whose activities are in the public interest, and not for profit.


  1. Medical services;
  2. Services rendered by Community Banks, Micro Finance Banks and
    Mortgage Institutions;
  3. Services rendered to diplomats;
  4. Plays and performance conducted by educational institutions as part of
    learning; and
  5. All exported services.

Unlike the currently contested federal government VAT Act,8 the Law provides for 6% as the VAT rate.9 The Law places obligation on a taxable person10 to either register at the LIRS for VAT purposes within 6 months of commencement of the Law, or within 6 months of commencement of business, whichever is earlier, or face conviction and a fine of N50,000 for the first month of infraction and N100,000 for each subsequent month of continued infraction.11

Upon registration for VAT purposes, monthly returns and remittance of VAT is due by the 21st of the succeeding month in a manner specified by the LIRS. This means the first return under the law will become due by the 21st day of the month after enactment.12

The Law similarly places an obligation on non-resident entities (NREs) carrying on business in Lagos State to register with the LIRS for VAT purposes, using the address of a person (or one of the persons) with whom it has subsisting contract for the purpose of correspondences.13 Once registered with the LIRS for VAT purposes, a taxable person must keep accounting records of transactions, imports, operations, etc., relating to goods and services chargeable to VAT. Failure to perform this obligation attracts a maximum fine of N250,000 upon conviction.14 Like the VAT Act, statutory bodies, Ministries, Departments and Agencies (MDAs) are to deduct VAT at source.15

It is noteworthy that, contrary to the position indicated in the amended VAT Act,16 there is no threshold below or above which taxable persons are eligible for VAT exemptions.

In terms of dispute resolution, the Law seeks to establish the VAT Appeal Tribunal (VATAT) to determine VAT disputes. An appeal against the decision of the VATAT will be determined by the High Court of Lagos State.17 The VATAT has a quorum of three (3) persons and will be composed of the following persons to be appointed by the Lagos State Governor, on the recommendation of the Attorney-General of the State:

  1. The chairman, a legal practitioner of proven ability and integrity with a minimum of 10 years' experience in tax matters;
  2. An accountant with relevant experience in tax matters;
  3. Three (3) other persons from either the private or public sectors.18 and
  4. A registrar drawn from the Lagos State public service within the Grade 15 salary cadre (at the minimum).19

The Law carefully provides for individual criminal liability in lieu of corporate criminal liability.20 Accordingly, where a corporate entity or firm (or other association of persons) commits an offence contained in the Law, the criminal liability will rest on the shoulders of a director, manager, secretary, or partner (or person purporting to act in any of the capacities earlier listed).

Revenue derived from VAT will be shared in the ratio 3:1 (State government: Local Government). The VAT revenue distribution amongst local governments will be based on the principle of derivation.21


Once the Law is signed by the Governor of Lagos State and published in the state gazette, it begins to have the force of law especially from the commencement date. Stakeholders and taxable persons as expatiated above should be on the lookout for the commencement of the Law and for especially, the eventual resolution of the lingering VAT constitutional issue by the apex court of the land.22 A further controversy on this constitutional issue is that the status quo ante bellum ordered by the Court of Appeal to be maintained by parties23 is not clear - should the FIRS continue to collect VAT? Or should Rivers and Lagos states proceed to implement their respective VAT laws?24

In the meantime, it is advisable for applicable corporates and individuals to have their eyes and ears peeled and constantly attached not just to the mass and social media but to competent tax lawyers in whom confidence can be reposed for timely guidance.


1. Olukolade Ehinmosan, Associate, Real Estate and Succession, SPA Ajibade & Co, Lagos, Nigeria.

2 (unreported) Suit No. FHC/PH/CS/149/2020, judgment delivered by Stephen Dalyop Pam, J on 9th August 2021.

3. accessed 8th September 2021 at 5:33 pm.


accessed 9th September 2021 at 3:56 pm.

5. Section 7 of the Law.

6. First Schedule to the VAT Act (as amended by the Finance Act 2020).

7. Section 3 and the Schedule to the Lagos State VAT Law 2021.

8. accessed 9th September 2021 at 12:39 pm.

9. Section 4 of the Law.

10. Section 1 of the Law defines "taxable person" to include (a) an individual or body of individuals; (b) family; (c) corporation sole; (d) trustee or executor; (e) a person who independently carries out an economic activity in a place, as a producer, wholesale trader, supplier of goods, supplier of services etc., and includes a person and an agency of government acting in that capacity; or (f) a person exploiting tangible or intangible property for the purpose of obtaining income by way of trade or business, or a person or agency of Government acting in that capacity.

11. Section 8 of the Law.

12. Section 15 of the Law.

13. Section 9 of the Law.

14. Section 10 of the Law.

15. Section 12 of the Law.

16. Section 38 of the Finance Act 2019 which amended section 15 of the VAT Act 1993 (as amended in 2007).

17. Section 20 of the Law.

18. Section 21 of the Law.

19. Section 25 of the Law.

20. Section 30 of the Law.

21. Section 33 of the Law. Ratio 3:1 signifies 75% to the state government and 25% to the local governments based on derivation principle.

22. The Court of Appeal sitting in Abuja had on Friday, 10th September 2021 ordered the FIRS, Rivers and Lagos States to maintain status quo ante bellum on the collection of VAT pending the determination of the appeal filed by the FIRS against the judgment in note 2 above: ( accessed 13th September 2021 at 2:32 pm.

23. Ibid.

24. accessed 13th September 2021 at 2:45 pm.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.