The Business Premises Levy is a tax collected by state governments on properties used for business activities including offices, factories, shops and rental properties.
By Joshua I. March 15, 2025
By making contributions on the premises used for business, commercial activities help support projects in their state like road construction, schools and healthcare facilities.
It is in alignment with Nigeria’s broader policies that are aimed at reducing state’s reliance on oil revenues. The Tax Reform Bills in the National Assembly do not affect this levy.
Who Is Liable to Pay Business Levies?
Any individual or entity owning or occupying a property used for business purposes is liable to pay a business levy to the state where the business is operated.
This includes:
- Local businesses, whether sole proprietorships or partnerships.
- Foreign companies operating in Nigeria.
- Limited liability companies, regardless of size.
- Properties used for offices, factories, shops, or rental income generation.
Both urban and rural areas are covered. There is no sort of distinction based on business revenue. The only exceptions are lock-up shops and kiosks. These pay tax to the Local Government Area authorities instead.
How is it Calculated?
Calculation varies by state. For instance, in Lagos State, as detailed on the LIRS website, the following fees apply:
Registration Fee: ₦10,000 for urban areas (e.g., Lagos Island, Ikeja), ₦2,000 for rural areas (e.g., Epe, Ikorodu).
Renewal Fee: ₦5,000 for urban areas, ₦1,000 for rural areas, on an annual basis.
Current tax laws do not permit states to charge more than ₦10,000. These rates have been reviewed in the proposed Tax Reform Bills. But they have not been eliminated.
How to Register and Pay Business Levy
The Lagos State government has streamlined tax compliance with its e-Tax platform. The steps include:
- Create an Account: Visit the e-Tax portal at LIRS e-Tax and create an account and select “Corporate” as the taxpayer type and inputting the Company Registration Number (CAC Number).
- Select an Agency: Choose the revenue collection agency closest to the business location.
- Select Your Tax Type: Select “Business Premises” as the tax type.
- Payment Period: Indicate whether it’s an initial registration or renewal.
- Input Amount: Enter the amount due, based on urban or rural classification.
- Generate a payment bill.
- Make payment: Complete payment through available channels, such as bank transfer or online payment.
- Receive your receipt: Receive a Lagos State Revenue Receipt via email and download it from the portal.
Note that other states may have different platforms or manual processes. For Ogun state, the levy can be paid at businesspermit.ogunstate.gov.ng.
However, compliance is critical for businesses to avoid penalties, which may include fines, legal action and/or sealing of premises. Timely payment also supports state development, funds essential services that benefit businesses, such as improved infrastructure and security. Non-compliance can disrupt operations, particularly for small businesses with limited resources. As a business owner, it is your legal obligation.