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Consumption Tax

What is the name of the Law?

Hotel and Event Centers Occupancy and Restaurant Consumption Law of Edo State, 2011.

What outfits are covered by the Law?

Hotels, Guest Houses, Events Centers, Fast Food Joints, Restaurants, Eateries.

What is the Law meant to achieve?

The law is meant to generate revenue for rapid social and economic development of Edo State and also act as a catalyst for the growth of the hospitality/tourism industry.

What is the tax to be paid on?

The tax is to be paid on any service rendered and facilities used in the hotels, event centers, fast food joints, restaurants, eateries.

How is the Consumption tax different from VAT?

The Consumption Tax is an Edo State Government tax to be paid by any individual/group on services enjoyed/facility used in any of the outfits covered by the Law; while the value added tax is a Federal tax imposed on certain goods/ services.

What is the rate of tax?

The rate of the consumption tax is a 5% charge on the cost price of any service enjoyed/facility used in any of the identified outfits.

Who pays the tax?

Those who patronize and use the facilities of Hotels, Guest Houses, Event Centres, Fast Food Joints, Restaurants, Eateries.

Who collects the tax?

Operators of Hotels, Guest Houses, Event Centres, Fast Food Joints, Restaurants, Eateries.

When will the Law become fully operational?

The Law came into effect on the 30th of June, 2011. However, effective implementation commenced on the 1st of September, 2011.

At what point is the tax collected?

The tax is collected at the point where a consumer makes payment for any service rendered or facility used in Hotels, Event Centres, Fast food joints, Restaurants, Eateries.

When are collecting agents expected to make remittance?

The respective collecting agents are expected to make remittances on or before the 7th day succeeding the month of collection.

How does the collection agent make remittance?

Collection Agents are expected to make remittances into dedicated Internally Generated Revenue (IGR) accounts of Edo State Government in the designated Banks.

What constitutes a default?

A default is when a collecting agent fails to make returns and /or fail to remit taxes collected within the time allowed by the law.

Are there penalties/sanctions for defaulter?

This range from a fine up to the sum of N2,000,000 (Two Million Naira), a jail term of up to 6 months or both depending on the gravity of the default. The tax authority (EIRS) is also empowered by Law to effect the BoJ principle in respect of defaulting operators.

What does BoJ mean?

BoJ is an acronym for “Best of Judgement”. This is a principle that will be applied by the tax authority in the assessment of the tax liability of a defaulting operator. This implies that the tax authority has the mandate to make an estimation of the tax liability of an operator in the event of the operator withholding full disclosure in services offered or facilities operated.