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VAT war: FG, others face N3.9tn loss, Lagos joins Rivers legal battle against FIRS

Wike and Sanwo-Olu

The Federal Government, the Federal Capital Territory and about 34 states may face revenue drop to the tune of over N3.9tn if the governments of Rivers and Lagos states begin the collection of the Value Added Tax in their respective states.

Findings by Saturday PUNCH revealed that in the last five years alone, the Federal Inland Revenue Service, a Federal Government agency that hitherto collected VAT on behalf of all the states and the Federal Capital Territory, realised N5.6tn. Out of this sum, Lagos and Rivers states contributed about N3.9tn.

Following the moves by the two states to start collecting their VAT independently, having enacted laws to that effect, the aggregate sum realised from VAT, which was shared by the three tiers of government, may suffer a decline.

Justice Stephen Pam of the Federal High Court in Port Harcourt, the Rivers State capital, had on August 10, 2021, ruled that the plaintiff, Rivers State, and not the FIRS, should be collecting VAT and Personal Income Tax in the state.

The court on Monday also dismissed the FIRS’s application for stay of execution, noting that since the state had enacted a law to that effect, courts are bound to obey laws. He said the law remained valid until set aside by a court of competent jurisdiction.

Meanwhile, the Court of Appeal sitting in Abuja on Friday ordered Rivers and Lagos states to stay action on the collection of VAT pending the determination of the appeal for a stay of execution filed before it by the FIRS.

Justice Haruna Tsammani, who delivered the lead ruling of the three-man panel of the appellate court, gave the order when the matter came up before the court.

He ordered that “the status quo ante bellum” be preserved.

“The parties shall refrain from taking any step regarding the judgment pending the hearing and determination of the application for stay of execution,” he said.

The FIRS in an appeal marked CA/PH/282/2021 prayed the appellate court to set aside the ruling of the Federal High Court in Port Harcourt, which granted River State power to collect VAT and PIT. The tax body also wrote to the National Assembly, seeking the inclusion of VAT in the exclusive legislative list. It also asked the federal lawmakers to approve for it the establishment of the Federal Revenue Court of Nigeria.

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