According to Mr. Kazeem Adeniji, the
Honourable Attorney General of Lagos State, at a parley with certain key
members of the NBA Branches in Lagos State, the rationale for the current
development of the executive bill which has since translated into the Land Use
Charge Law (LUCL) 2018 was targeted at bringing into the tax net properties
located in the highbrow areas of the state which had hitherto been enjoying the
laxity of obsolete laws.

In their wisdom, the new law was thought up to harmonise property
valuations (as discharged under the Land Rates Law and the Neighbourhood
Improvement Charge Law) within the state, and also absorb the obligation to pay
Tenement rate (a product of the Federal House of Assembly as a function for the
Local Government) in order to avoid double taxation.

By Thursday, March 15, 2018, the government announced reductions
which were termed discounts on the rates hitherto initially prescribed. See the
Schedule at Land Use Charge Annual Rate. Its reason was that engagements with
stakeholders have necessitated this initiative.

Welcoming as this may be perceived, the entire body of the law
however still leaves much to be desired in terms of meeting the people’s needs.
Here is an expose of the legislation in succinct highlights.


Section 9 of the LUCL 2018 introduced
a new sub-clause at Section 9(1) which states that “The owner of a property or
occupier of a lease of less than ten (10) years is liable to pay Land Use
Charge in respect of a taxable property.”

In comparison to the provision of
Section 9 of the LUCL 2001 which is currently sub-section 2 of the LUCL 2018,
the newly introduced sub-section 1 of the LUCL 2018 provides for payment of tax
on taxable property subject to a lease of less than ten (10) years. In
addition, it made either the owner or lessee occupier of such taxable
properties of a lease of less than ten (10) years privy to discharge the burden
of paying the Land Use Charge (LUC)!

Thus where Mr. Whiteacre owns a
property and leases to Mr. Blackacre for 8years certain, either Mr. Whiteacre
as owner or Mr. Blackacre as lessor will be eligible to pay tax on such taxable
property. The question now is, who determines who pays or discharges the
obligation to pay such LUC as levied by the state government?


Section 12 (1) of the LUCL 2018
provides for the category of properties exempted from the payment of the LUC.

At Sub-section 1 (a) of the LUCL 2018,
a variation in the use of property owned or occupied by a religious body was made.

Under the 2001 LUCL, properties owned
and occupied by a religious body and used exclusively for “public workshop” or
religious education were exempted from the payment of the LUC.

LUCL 2008 narrowed the exemption down
to properties owned and occupied by a religious body and used exclusively as “a
place of worship” or religious education.

The implication of this is that where
any religious body deploys its property whether as owner or occupier for
ventures or events other than worship or for religious education, such a
religious body is liable to pay tax on the said property.

Thus, where a property owned or
occupied by a religious body is equally deployed for extraneous purposes like a
wedding reception or celebration of the members’ birthdays, then, such property
will be subject to taxation as neither of these uses fall into the category of
‘exclusive place of worship or religious education’!

Another variation equally occurred at
Section 12 (1) (b) of the LUCL 2018 wherein the qualification for cemeteries
and burial grounds became exclusive of privately owned or managed cemeteries
and burial grounds. With this exclusion, privately owned cemeteries and burial
grounds in Lagos State are now excluded from the tax benefit hitherto enjoyed
and are now elevated into the club of tax payers in the state.

Section 12 (1) (d) of the new LUCL
2018 provides for ‘Property used as public library or as a private library
certified by the Commissioner to be non-profit making’. This section expanded
the scope of exempted properties to include privately set up libraries known to
operate as not-for-profit establishments which purpose obviously is for the
good of the society.

Section 12 (1) (f) of the LUCL 2018
exempts ‘all palaces of recognised Obas and Chiefs in the State provided that
if any of the exempted property is leased out to private entities for revenue
generation, it shall forfeit its exemption status as contemplated under the
provisions of this Law.’ This provision drags the traditional leadership into
the tax net should there be an attempt to make money off the structural
heritage (palaces) they occupy as leaders of the community.

Section 12 (2) (iii) of the LUCL 2018
makes provision for partial relief to be granted to certain property types. Here,
the partial relief exemption that may be granted is restricted to three
categories of properties: Property occupied by a non-profit making
organisation, property used solely for community games, sports, athletics or
recreation for the benefit of the general public and property used for
charitable or benevolent purposes for the benefit of the general public and
owned by a non-profit making organisation.

Unlike what was hitherto obtainable
under the 2001 LUCL, properties owned by either the State, Local or Federal
government, though utilised for community purposes are hereby exempted from the
possibility of consideration for partial relief. Equally excluded are
properties not owned by not-for-profit organisations deployed for recreational
and sporting activities.

In essence, the Stadia and National
Theatre located in Lagos shall be eligible to pay tax under the LUCL!


Section 13 (1) (c) of the LUCL 2018 is
a novel inclusion which brings into the tax net an exempted property or part of
an exempted property of a religious body registered in the name of an
individual or corporate body.

The only way exemptions (partial or
whole) under the LUCL 2018 will benefit a religious body is where such property
is registered in the corporate name of such a religious body. Thus, where the
property is registered in the name of the founder or the spouse or child/ren or
some other name other than the corporate name of such a religious body (that is
the name with which it is registered at the Corporate Affairs Commission),
exemptions that would ordinarily have been applicable becomes automatically

Section 13 (3) and (4) of the LUCL
2018 provides for the mandatory obligation to report in where a change occurs
and an exemption privilege is forfeited. Failure to make such notification or
report attracts a fine of up to three (3) times the value of the exemption in


Section 14 (2) of the LUCL 2018
confers a dual responsibility in relation to the Land Use Charge Demand Notice.
In this section, the Land Use Charge Demand Notice is to be delivered to the
owner or occupier. In the equivalent, a request for same can be made by either
the owner, occupier or some authorised agent of the property at any of the land
use charge offices or via electronic platform.

In essence, the provision has made it
possible for persons to suo moto make
a request for Land Use Charge Demand Notices without waiting for it to be
delivered to them. It equally makes this more innovative by providing that same
can be obtained at any land use charge office or via electronic platform.

It is our opinion that the latter has
removed the barrier of geography, both at the physical level of location of
land use charge office as well as electronically, as an excuse for not
receiving a land use charge demand notice and hence not paying.

It is only hoped that certain security
features or mechanisms will be put in place to prevent persons outside of the
stated bracket (owner or occupier or authorised agent) from making a
requisition for and being granted their request for such a demand notice.

Section 14 (5) of the LUCL 2018 is
however very clumsy. Still on demand notice, it provides that “Upon an
application in writing made by the Owner, Occupier or authorised agent to the
Commissioner, the Commissioner may reduce the Land Use Charge by such discount
as is specified in the Demand Notice, if the payment is made within fifteen
(15) days of receiving the Demand Notice.

A myriad of queries come to mind in
interpreting this provision. First is the clause ‘the Commissioner may reduce
the Land Use Charge by such discount as is specified in the Demand Notice’.
Does specified in the Demand Notice qualify the Land
Use Charge or discount to be made.

Secondly, it provides that an
application be made for the discount if payment is made within fifteen (15)
days of receiving the Demand Notice. On the assumption that this clause is meant
to be an incentive for prompt payment, neither the reminder sub-clauses nor any
in the entire Law did it state how such discount as granted will be claimed or
counted as a benefit in favour of the person liable to pay the amount of Land
Use Charge on the Demand Notice!


Section 17 of the LUCL 2018 made
provision the establishment and composition of an Assessment Appeal Tribunal in
each division of the state, to wit, Ikorodu, Badagry, Ikeja, Lagos Island and

This provision is commendable in that
it specifies the quality and number (9) of persons to constitute the Appeal
Tribunal. However, its effect may be pin-drop on account of the number of
properties located in which of these divisions vis the number of Appeal
Tribunal available to address such applications.

Sections 18, 19, 20, 21and 22 of the
LUCL 2018 provide the operative guidelines with which the Tribunal is to
function. Quorum is fixed at two-third majority of the members. Tenure of
office of both the Chairman of the Tribunal and other members is three (3)
years with a possibility of re-appointment for a similar term of years.
Authority of the Tribunal to make its own standing Orders to regulate
proceedings at any of its meetings, payment of remuneration and allowances to
the Chairman and members of the Tribunal. And lastly, conditions for ceasing to
occupy office which may be on the ground of inability to discharge the
functions of the office on account of infirmity of mind or body or for any act
of misconduct on the on hand; resignation of membership by notice in writing
which will be effective immediately the Governor accepts such resignation; or
removal from office by the Governor on the ground of interest of public good.

Dispute resolution: 23 (e) and Section 25 of the LUCL 2018 speak
to the dispute resolution options available to the Tribunal. Here, alternative
to dispute resolution mechanism in the form of confidential mediation is
prescribed. Where this fails, parties are at liberty to commence proceedings
formally (as trial before a Magistrate Court) or seek other lawful alternative
remedies. This in essence means that the Tribunal is not vested with the sole
mandate to resolve assessment disputations for parties.


 Section 28 of the LUCL 2018 cedes the power to
recover sums owed as land use charge through the Courts to the Attorney General
on the recommendation of the Commissioner of Finance. Here, sums owed even by a
deceased in his lifetime is eligible for collection.

The provision is however flawed as it
did not state who shall be eligible to discharge such a payment where the
deceased died in penury or had no estate or material possession to bequeath or
where what is left behind is insufficient to settle the said outstanding sum as


Section 29 and 30 of the LUCL 2018
prescribes the punishment that will be meted out to defaulters or offenders as
well as those who instigate others from obeying the 2018 Law. The monetary fine
for both classes of offenders is N250, 000. 00 while the jail term in either
case is three (3) months.

Section 32 (1) and (2) of the LUCL
2018 provides for the punishment of officers and consultants engaged by the
State to effect the collection of land use charges on failure to remit same.
Penalty here is a refund of the collected amount plus a 25% interest thereon
and the possibility of a six (6) months term of imprisonment.


Section 31 (6) and (5) of the LUCL
2018 grants enforcement powers to demand for default payments or sum owed on
the State.

Here, a pre-condition of service of
warning notices at least three separate (3) times within the space of at least
forty-five (45) days for each occasion should be complied with prior to
enforcement of default to pay either by civil action or such Order of the Court
as appropriate for purposes of the recovery of the Land Use Charge and no


This in essence proscribes the
inclusion of additional recovery heads like costs, damages and incidental
charges associated with dispute resolution via litigation.

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