August 10, 2020
On 5th August, 2020, the Lagos State Commissioner for Finance, Dr. Rabiu Olowo, informed the general public that the Lagos State Government has reviewed its Land Use Charge (“LUC”) rates downwards by reversing the rates to the Pre-2018 rates via a new Land Use Charge law of 2020. Penalties for non-compliance for 2017, 2018 and 2019 were also waived. However, the new method of valuation of property for the purposes LUC (as introduced in 2018) remains unchanged.
The Land Use Charge is a property charge imposed on property owners in Lagos State. It is governed by the Land Use Charge Law of Lagos State (LUCL or the law). The LUCL was first introduced in 2001 and it was replaced by a subsequent LUCL that was enacted on 8 February 2018, with an upward review of the LUC rates as well as a change in the method of valuation of properties which increased the LUC payable by property owners. (Read our article on this here).
The re-enactment of the LUCL in 2018 was met with resistance from affected stakeholders mainly due to the increased rates. In view of this, the Honourable Commissioner for Finance in Lagos State recently announced that Lagos State Government has introduced LUC reforms via an LUC law of 2020 which seeks to address the concerns of Lagos residents and reduce the financial burden on residents as it relates to the Land Use Charge.
Based on the Public Announcement, some of the changes include the following:
The downward review of the LUC rates is a welcome development as the revised LUC rates address concerns expressed by residents and also reduces the financial burden incurred in payment of LUC, especially during this COVID-19 Pandemic.
We have noted that the commencement period of the new rates and the timeline of the application of incentives such as the 10% COVID-19 early payment incentive is not clearly stated, but, it is expected that the State Government will issue additional clarification on this in due course.
Based on the foregoing, affected persons should consult their financial / tax advisors on the impact of the changes on their LUC obligations and how they can take advantage of the reduced rates and the early payment incentives. We will continue to monitor updates in this regard and highlight any subsequent developments.