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States have no valid claim on VAT collection, it’s on exclusive legislative list – Malami
Attorney-General of the Federation and Minister of Justice, Abubakar Malami has said that states in the country do not have any valid claim on Value Added Tax collection.
Malami made the statement in an interview on Channels Television on Friday September 24, amid a faceoff between some states and the Federal Inland Revenue Service on VAT collection.
According to him, the responsibility, right and constitutional powers to legislate on collection of VAT is exclusively and constitutionally vested in the national assembly and not in the state.
He said;
“A lot has precluded the state from collecting value-added tax. One, generally speaking, as you rightly know, the issue of the value-added tax is an issue on the exclusive legislative list.
“And the implication of being in exclusive legislative list matter is that only the national assembly can legislate on it. The question that you may perhaps wish to address your mind on is whether there exists any national legislation that has conferred the power on the state to collect VAT. And my answer is ‘no’.
“In the absence of a law passed by the national assembly in that direction, no state can have a valid claim to collection of value-added tax.
“The responsibility, right and constitutional powers to legislate on collection of VAT is exclusively and constitutionally vested in the national assembly and not in the state.
“Where the national assembly has not passed any law in that regard authorising the state to collect VAT, then it goes without saying that no state can arrogate unto itself the powers to collect VAT.”
The AGF also said that it will be “reckless” for any state to go ahead to collect VAT, despite the court judgement asking parties involved in the case to maintain status quo.
Malami added;
“I don’t see any state perhaps taking the law unto its hands without allowing the judicial process to take its natural course and in breach of the prevailing legislation.
“I don’t see the states acting arbitrarily and setting a very bad precedence as far as governance is concerned with particular regard to the fact that the matter is receiving judicial determination.
“I can’t understand. I can’t perhaps bring that thought into consideration that I believe it could amount to a high level of recklessness on the part of any state government to be operating in breach and to be operating a lawless governance style as far as the Nigerian state is concerned.”
September 25, 2021
FG, States, LGs Share N696.965bn As VAT Revenue Hits N166.228bn
The Federation Accounts Allocation Committee (FAAC) has shared a total of N696.965 billion as federation allocation for the month of August.
Oshundun Olajide, a Deputy Director of Information at the Office of Accountant General of the Federation (OAGF), disclosed this in a statement on Thursday.
This comes as the nation records a significant increase in the collection of Value Added Tax (VAT) and import duty, amid the lingering controversy over whose responsibility it is to collect VAT.
A series of court cases and rulings emerged recently as the Rivers State government, backed by Lagos and some other states, challenge the legality of the Federal Inland Revenue Service (FIRS) to collect VAT.
Olajide stated that FAAC held a virtual conference on Wednesday where it shared the sum to the three tiers of government.
“From this amount, inclusive of Value Added Tax (VAT), Exchange Gain, Excess Bank Charges and Revenue from non-oil, the Federal Government received N289.257 billion, the states received N217.183 billion, the local government councils got N161.541 billion, while the oil-producing states received N41.376 billion as derivation (13 per cent of mineral revenue),” the statement read.
The communique issued at the end of the meeting indicated that the gross revenue available from the Value Added Tax (VAT) for August was N166.228 billion.
According to it, the Federal Government got N24.934 billion of the revenue generated from VAT, while the states and local government councils (LGCs) received N83.114 billion and N58.180 billion respectively.
“The sum of N50 billion from non-oil revenue was equally distributed accordingly to the three tiers of government as follow – the Federal Government received N26.340 billion; the states got N13.360 while the LGCs received N10.3 billion.
“The distributed statutory revenue of N477.504 billion was received for the month from which the Federal Government received N236.437 billion, states got N119.924 billion, LGCs got N92.4456 billion, and derivation (13 per cent mineral revenue) got N28.687 billion,” the statement added.
It revealed that Companies Income Tax (CIT), Petroleum Profit Tax (PPT), oil and gas royalties, and excise duty recorded decreases, while import duty and VAT increased significantly.
The communique indicated that total revenue distributable for the month included gross statutory revenue of N477.504 billion, VAT of N166.228 billion, exchange gain of N2.830 billion, excess bank charges recovered of N0.403 billion, and N50 billion from non-oil revenue.
This brings the total distributable revenue to N696.965 billion for the month of August.
September 24, 2021
FG Considering To Resolve VAT Dispute At Supreme Court – Malami
As more reactions trail the controversy over the collection of Value Added Tax (VAT), the Federal Government has moved to find a permanent resolution to the disputes.
The Minister of Justice and Attorney-General of the Federation (AGF), Abubakar Malami, who disclosed this on Wednesday in New York, said the government was considering taking an action at the Supreme Court.
“The Federal Government had indeed taken cognisance of the fact that where there exists a dispute between a state and the Federal Government, it is the Supreme Court that should naturally have the jurisdiction to determine the dispute between the state and the federation,” he told reporters on the sidelines of the United Nations General Assembly in the United States.
“And we are taking steps to consider the possibility of instituting an action before the Supreme Court for the purpose of having this matter determined once and for all.”
In a ruling delivered in August, Justice Stephen Pam of the Federal High Court in Port Harcourt granted the Rivers State government the right to collect VAT, instead of the Federal Inland Revenue Service (FIRS), paving the way for Governor Nyesom Wike to assent to the VAT Law, 2021.
But the FIRS, which was displeased with the development, filed a motion on notice to apply for a stay of execution on the earlier judgement delivered by Justice Pam.
Justice Pam, however, refused the application on the ground that the federal agency failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly.
While he stated that the state law on VAT was valid and subsisting, Governor Wike directed the state’s revenue agency to fully implement the VAT law.
The FIRS later approached the Court of Appeal in Abuja with a civil motion seeking a stay of the execution of the judgement granted by the court in Rivers, pending the determination of the case.
A three-man panel of the appellate court led by Justice Haruna Tsammani then directed all parties to maintain the status quo and refrain from taking action that would give effect to the judgement delivered by Justice Pam, pending the hearing and determination of the instant suit.
In its reaction, the Rivers State government filed an appeal at the Supreme Court to challenge the ruling of the appellate court.
It sought relief of the apex court to allow the appeal, set aside the decision of the appeal court, and dismiss the oral application for interim injection made by the FIRS.
September 23, 2021
Wike Slams Critics Over VAT Collection Dispute
Rivers State Governor, Nyesom Wike, has slammed those criticising him for the decision of the state government to challenge the legality of the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT).
He believes Nigeria must encourage federating states to harness their resources and generate revenues, including VAT to advance their development.
Governor Wike stated this on Monday when the Managing Director and Editor-in-Chief of the SUN (Newspaper) Publishing Limited, Mr Onuoha Ukeh, led a delegation to present a letter of nomination to him as the SUN Man of the Year 2020 Award at Government House in Port Harcourt.
“Some people say, be your brother’s keeper; I have no problem in being my brother’s keeper but why not come out and say, let us tell ourselves the simple truth?” he queried. “As it is being provided in the law, who is the person responsible to collect the VAT?
“When you agree to that, that it is the state, then we can sit down to look at the different problems of states. And not to say be your brother’s keeper while you’re doing an illegal thing, in disobeying what the law says you should not do.”
The governor faulted one of his colleagues who reportedly threatened that the judgement of the court that allowed states to collect VAT within their jurisdiction would not stand.
He said rather, such a governor should commend Rivers State government for seeking to entrench fiscal federalism and constitutionalism.
Governor Wike raised an alarm over attempts to frustrate Rivers and other states to actualise the constitutional provisions that empowered them to harness their resources and revenues, particularly VAT.
He also described as an act of discrimination, the alleged refusal of the Federal Government to include Rivers as one of the states that would benefit from projects, for which it was seeking fresh foreign loans to execute.
“Look at the money that Federal Government has gone to borrow from the World Bank, of all the projects in all the states, the Federal Government did not include Rivers State,” the governor said.
He explained that beyond the provision of infrastructure, his administration was seeking a law that would provide comfortable accommodation for judicial officers on retirement.
The reason, he said, was to ensure that while in service, the judicial officers can concentrate on their jobs without cutting corners and avoid corrupt practices.
September 21, 2021
VAT: We are confused over remittance, says Private sector
The Organised Private Sector of Nigeria has said fulfilling of tax obligations, especially remitting Value Added Tax, has become confusing as businesses did not know the actual authority to relate with.
A statement from the association disclosed that OPSN chairman, Mr Taiwo Adeniyi, said this while addressing a forum on Friday.
The Organised Private Sector of Nigeria comprises of Manufacturers Association of Nigeria, Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, Nigeria Employers Consultative Association, Nigeria Association of Small Scale Industries and Nigeria Association of Small and Medium Enterprises.
Some state governments and the Federal Inland Revenue Services are currently slugging it out in court over who should VAT in their states.
Adeniyi said, “It is important to also note that at a time when businesses are clamouring for streamlining and reduction of tax burdens, the ongoing challenge has the potential to make businesses pay double VAT because of the demands of the FIRS and state governments for remittance of VAT.
“More so, as the deadline for remittance of VAT collection falls due on 21st of every month. Businesses as the collecting agents are practically unclear on authority to remit to and without a clear path, this would further aggravate the pain on businesses.”
He added that the Federal Inland Revenue Services and states should not throw businesses under the bus.
“We appreciate the Lagos and Rivers state governments for the platform created to engage organised businesses in the course of this controversy.
“We appeal that the FIRS and the states should also engage, in the interest of enterprise competitiveness and national development.”
Adeniyi said that adding the current issue to accumulated issues facing Nigerian businesses would make survival of enterprises even tougher.
September 20, 2021
Plan to Amend Constitution over VAT Will Be Dead on Arrival – Akeredolu
Governor of Ondo State and Chairman, Southern Governors Forum, Mr. Rotimi Akeredolu, has said the move by the Federal Inland Revenue Service (FIRS) to push for amendment of the constitution so as to put collection of Value Added Tax (VAT) on the Exclusive List would fail. Akeredolu stated this during an interview on “THISDAYLIVE”, a programme monitored on Arise News Channel, yesterday.
The governor said, “The issue of VAT, looking at the constitution, is under the purview of the states. Southern governors have taken a decision to pursue fiscal federalism. I am a lawyer. This is not a tax that is under the purview of the federal government.
“We, the southern governors, clamour for true federalism and true federalism includes fiscal federalism. There is no room for equivocation. Southern governors have taken a decision. They know that the constitution did not give them the power to collect VAT and that is why they are clamouring for the amendment of the constitution.
“That amendment will be dead on arrival. Even if the governors agree to amend the constitution, the House of Assembly in the various southern states will never approve it. The amendment must follow laid down process.
“We are supposed to be a federation, but we have been operating unitary government, rather than the federal arrangement. That plan to amend the constitution over VAT will fail.”
According to Akeredolu, the recent comment by the governor of Ebonyi State, Dave Umahi, who opposed the move for states to collect VAT because the consumption tax forms 40 per cent of the allocation that accrue to his state, is his personal opinion. Akeredolu insisted that the southern governors were united in their resolve to push for states’ collection of tax.
On the southern governors’ insistence that the next president of Nigeria should come from the region, Akeredolu said the governors spoke the people’s mind. He said people in the region had decided that in recognition of fairness and equity, now that the North had produced a president, who would end his administration in 2023, it should be the turn of southern Nigeria to produce the next president of the country.
According to him, “We are not a pressure group, so we are not threatening anyone, but we represent the people of the South. We have agreed that after President Muhammadu Buhari, it will be the turn of the South to present the next president of Nigeria.
“We are responsible governors who want to realise the yearnings of our people. We took that decision when we met in Asaba. We reiterated that decision when we met in Enugu.”
The Ondo State governor also denied reports that the governors might be planning to pick one of their members and support to become the next president of Nigeria, saying such an idea has never been part of their discussion.
Responding to a question on the Petroleum Industry Act (PIA), the Ondo State governor said the forum had taken some steps to push for the amendment of the legislation, in conjunction with the Nigerian Governors Forum (NGF), because some of its contents negated the power of the states and dealt directly with the communities, “as if the communities are not under the control of the states.”
According to him, the southern governors also disagreed with the three per cent contribution for host communities, saying, “There are areas we have agreed on. We are also asking, why not use the Sovereign Wealth Fund, instead of the Nigerian National Petroleum Corporation (NNPC), to manage the host community fund?”
The chairman of Southern Governors Forum also spoke about electronic transmission of election results, saying the southern governors affirmed their support for the initiative in order to ensure transparency. He urged legislators from the southern part of the country to ensure they represented the people that elected them into office.
Akeredolu said there would be a day of reckoning for those who turned against the wishes of those that elected them into political positions.
On the anti-open grazing law, he said the governors would not rescind their resolve on the matter, saying the law is not targeted at anyone, but meant to ensure the safety of lives and property.
Akeredolu stated, “The anti-open grazing law is not targeted at anybody. We have our own livestock farmers. If they graze their cattle in the open, the law will catch up with them. I don’t want to respond to Miyetti Allah or whatever you call them. We are not dealing with associations; we are dealing with government.
“We have our own association. In Ondo, we are taking the law seriously and those Miyetti Allah in Ondo are cooperating. We have gone past that anachronistic way of rearing cattle. You can feed them at one place and they will do better. Katsina State has also banned open grazing and they have even banned interstate movement of cattle.”
The governor also spoke on the in-fighting in his ruling All Progressives Congress (APC) and his visit to the national leader of the party, Bola Tinubu. Akeredolu said when he visited the former governor of Lagos State he was recuperating well, adding that his loyalists are looking forward to his return.
Akeredolu described Tinubu as the “Capone” of politics in the zones.
September 20, 2021
VAT Dispute: Umahi Begs Governors To Be Their Brother Keeper
Ebonyi State Governor, David Umahi, has appealed to state governors to sheathe their swords as the dispute over who should collect Value Added Tax (VAT) between the state governments and the Federal Inland Revenue Service (FIRS) persists.
He believes if the FIRS is stripped of such responsibility, only a few states will be major beneficiaries while others will be left to suffer.
“Even if you have all the money in the world, you will not be able to use it. So, it is very important, and it is coming at a very bad time,” the governor said on Friday when he appeared as a guest on Channels Television’s Sunrise Daily.
“I’m pleading with my colleagues to sheathe their swords, let us pass through this challenging moment before we start looking at who is right or wrong.
“We have to be our brother’s keeper; we have to see how we can grow the economies of the weakest states, otherwise we will breed a lot of insecurities to those super states; this is very important.”
A series of litigations and rulings have surfaced since the Rivers State government took the decision to test the legality of the collection of VAT by FIRS in various states.
‘Ebonyi Should Be Pitied’
The dispute started on August 9 when a Federal High Court in Port Harcourt granted the state government the right to collect VAT – an order that affected other states.
Although the case is before the Supreme Court, the latest is the reservation of the ruling of the Court of Appeal in Abuja, on the application for a joinder filed by the Lagos State government.
But Governor Umahi proposed that before states should be allowed to collect VAT, the ‘weakest states’ must be provided with enough resources to give them a comparative advantage.
According to him, the Federal Government should be the major contributor to VAT while state and local governments should have 85 per cent and the remaining 15 per cent taken by the Federal Government.
“Now, the Federal Government and the super states will be the most beneficiaries, and a number of states will collapse and by the reason of rampant law,” the governor decried. “I am also encouraging the Federal Government to look the way of Ebonyi State, we are highly disadvantaged.
“You say we should grow the economy, with what? We don’t have money to grow the economy. We have agriculture, we have solid minerals, and our solid minerals are being stolen away. Ebonyi State should be pitied, we’re in a very difficult situation. We have a lot of our youths unemployed.”
September 17, 2021
VAT bill scales first and second readings at Ogun Assembly
Amid the controversy that has trailed the dispute between the Federal Inland Revenue Service (FIRS) and some states over the collection of Value Added Tax, a newly introduced Value Added Tax Bill has scaled its first and second reading at Ogun state house of assembly.
The proposed bill which scaled first and second readings on the floor of the State House of Assembly on Tuesday September 14, was given unanimous backing by Ogun lawmakers.
The bill seeks to “accord the State its rightful position as a viable federating unit amongst the comity of States generating worthy financial returns in the country” and it was supported by the whole house through a voice vote at a plenary presided over by Speaker Olakunle Oluomo.
After lawmakers outlined need for enactment of the proposed law, the speaker committed the bill to the Committee on Finance and Appropriation for further legislative actions.
Oluomo said the public hearing on the bill would hold on Thursday, 16th September, 2021 at 10:00 am prompt.
A similar bill has been passed and signed into law in Rivers and Lagos states.
September 14, 2021
VAT: Rivers State Govt Files Appeal At Supreme Court
The Rivers State government has approached the Supreme Court to challenge the ruling of the Court of Appeal in the Value Added Tax (VAT) dispute between the state and the Federal Inland Revenue Service (FIRS).
A Senior Advocate of Nigeria (SAN), Emmanuel Ukala, alongside three other senior lawyers filed a notice of appeal at the apex court, documents obtained on Tuesday revealed.
The Attorney-General of Rivers State is the appellant while the FIRS and Attorney-General of the Federation (AGF) are joined as respondents.
The state government, in the 10 grounds of appeal dated September 13, informed the Supreme Court that it was dissatisfied with the decision of the appellate court delivered on Friday last week in which all parties were directed to maintain status quo.
It explained that the implication of the ruling of the appellate court was that parties were restored to their positions before a Federal High Court in Port Harcourt granted the Rivers State government the right to collect VAT, instead of the FIRS on August 9.
In one of the grounds of appeal, Rivers State alleged that the appeal court erred in law when it relied on the provisions of Section 6(6) of the Constitution and its inherent jurisdiction to found its decision to make an order to maintain status quo in the matter, pending the determination of an appeal filed by FIRS.
According to it, the appellate court in relying on its inherent jurisdiction to make the order failed to appreciate that its inherent jurisdiction cannot be applied in contravention of statutory provisions.
The state government, therefore, sought relief of the Supreme Court to allow the appeal, set aside the decision of the appeal court which they complained about, and dismiss the oral application for interim injection made by the FIRS.
It also asked the apex court to order that the substantive appeal by the FIRS and all other processes, be heard and determined by a new panel of the Court of Appeal.
Following the judgement delivered by Justice Stephen Pam of the Federal High Court, Rivers State Governor, Nyesom Wike, assented to the Valued Added Tax Law, 2021.
The bill had been passed by lawmakers in the Rivers State House of Assembly, along with four others that were also assented to by the governor.
But the FIRS, which was apparently displeased with the development, filed a motion on notice to apply for a stay of execution on the earlier judgement delivered by Justice Pam.
The court, in its ruling, refused the application, saying the federal agency failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly.
Justice Pam, therefore, stated that the state law on VAT was valid and subsisting, paving the way for Governor Wike to direct the state’s revenue agency to fully implement the VAT law.
The FIRS later approached the Court of Appeal in Abuja with a civil motion seeking a stay of the execution of the judgement earlier granted by the court in Rivers pending the determination of the case.
A three-man panel of the appellate court led by Justice Haruna Tsammani then directed all parties to maintain the status quo and refrain from taking action that would give effect to the judgement delivered by Justice Pam, pending the hearing and determination of the instant suit.
September 14, 2021
BREAKING: Gov Sanwo-Olu Signs VAT Bill Into Law
The Lagos State Governor, Mr. Babajide Sanwo-Olu, has signed into law, the State VAT Bill that was passed by the House of Assembly, on Thursday.
Sanwo-Olu signed the bill for a law to impose and charge VAT on certain goods and services.
The VAT bill had passed its first and second readings at the house on Monday, while the committee on Finance committee held public hearing on the bill while it was passed at parliament on Thursday.
By this act, the bill is considered a Law in Lagos.
Details later…
September 10, 2021