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Court Stops Rivers, Lagos From Collecting VAT
The Court of Appeal in Abuja has stopped the governments of Rivers and Lagos from collecting Value Added Taxes (VAT).
In a ruling on Friday, Justice Haruna Simon Tsanami, also directed that the law passed by Rivers State House of Assembly and assented to by Governor Nyesom Ezenwo Wike be put on hold.
The judge gave the order hours before Governor Babajide Sanwo-Olu signed the law on VAT.
Sanwo-Olu signed the law moments after he arrived the state from Abuja.
The appellate court’s decision followed an application by the Federal Inland Revenue Service (FIRS), seeking a stay of execution of the order of a Rivers State high court in the matter.
A Federal High Court in Port Harcourt had in August upheld the powers of the state to collect Value Added Tax (VAT) and Personal Income Tax.
The court also issued an order of perpetual injunction restraining the FIRS and the Attorney General of the Federation, from collecting, demanding, threatening and intimidating residents of Rivers to pay to FIRS, personnel income tax and VAT.
Both Rivers and Lagos state governments have already enacted legislations to give effect to the judgment in respect of VAT.
An earlier application by the FIRS to the high court in Rivers to stay execution of the judgment was on Monday refused by Justice Stephen Dalyop Pam on the grounds that the application would negate the principle of equity as the state legislature had already enacted law on the VAT collection.
September 10, 2021
BREAKING: Lagos Assembly Passes VAT, Anti-Open Grazing Bills
The Lagos State House of Assembly has passed the Value Added Tax (VAT) bill, along with a bill that prohibits the open grazing of cattle in the state.
The two bills were passed after unanimous votes by the lawmakers during Thursday’s plenary after they were read for the third time.
Following the passage of the bills, the Speaker of the House, Mudashiru Obasa, commended his colleagues for their passion to see that the state continues to grow.
“I thank you all for this historic exercise,” he told the lawmakers at the legislative chamber of the Assembly in Alausa, Ikeja.
Obasa also directed the Acting Clerk of the House, Mr Olalekan Onafeko, to transmit clean copies of the bills to the state governor, Babajide Sanwo-Olu, for assent.
The passage comes a day after the lawmakers held separate public hearings on the bills with stakeholders who declared their support for them.
Details later…
September 9, 2021
VAT: FIRS To Appeal Rivers Court Judgement
The Federal Inland Revenue Service (FIRS) on Wednesday said it has appealed the judgement of the Federal High Court in Rivers which held that the agency does not have the right to collect Value Added Tax (VAT) in the state.
In a news conference in Abuja, FIRS Group Lead, Special Tax Operations, Matthew Gbonjugbola, said it is the exclusive right of the agency to collect VAT in the country.
Gbonjugbola explained that the law mandating the FIRS to collect VAT seeks to protect businesses from multiple VAT.
“I can confirm to you that FIRS indeed approached an appellate court to review the judgement of the lower court at the Federal Court of Appeal in Rivers,” he said.
“Be assured that FIRS has filed an appeal and that one is in process and that is why we are not able to speak.”
Speaking further, Gbonjugbola said VAT collection cannot work at the sub-national level, maintaining that the FIRS is empowered by law to do so.
The FIRS official also dismissed purported plans by the agency to tax social media in Nigeria.
This is coming days after a Federal High Court in Port Harcourt delivered a judgment restraining the FIRS from collecting VAT and personal income tax in Rivers State.
VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 percent.
September 9, 2021
Rivers Begins Enforcement of VAT Law
The Rivers State Government has commenced implementation of the state’s Valued Added Tax (VAT) Law.
The state Governor, Nyesom Wike, stated this on Wednesday at an interactive session with representatives of corporate organisations at the Government House, Port Harcourt.
Governor Wike urged the business community to be ready to pay VAT for the month of September 2021 and subsequent months to the Rivers State Internal Revenue Service. According to him, he has already assented to the Rivers State VAT law passed by the State House of Assembly.
The governor warned corporate organisations not to feign ignorance of the State VAT law.
He declared that the State government will not hesitate to seal up the premises of any company that defaults.
“We are going to inaugurate the Tax Appeal Commission by Friday which will be headed by a retired judge of the state,” he disclosed.
Stating the importance of the meeting, Governor Wike said, it will enable the business community not to fall prey to the antics that could be deployed by the Federal Inland Revenue Service (FIRS) officials, who he said could use force to collect what does not belong to them.
Governor Wike explained that FIRS officials had in the past collected VAT in the State with impunity, knowing it was unconstitutional for them to do so.
According to him, his administration challenged their impunity in court and the Federal High Court in Port Harcourt, in its declarative ruling, had stated the constitution was right in vesting powers to collect VAT in the State government within its jurisdiction.
“When we challenged the Federal Government through the Office of the Attorney-General and FIRS in court, do you know what they did? They wrote this letter dated 1st of July 2021. Remember, it was in 2020 that we filed this action against them. But see how corrupt this country is.
“Corruption is not only about kickbacks, it is also about doing something illegally. We were in court in 2020.Then on July 1st 2021, the chairman of FIRS wrote to the National Assembly through the office of the Deputy Speaker of the House of Representatives.
“He was asking them to amend the constitution and insert VAT under item 58 of the exclusive legislative list, when we were already challenging that it is not their responsibility to collect VAT. They knew that what they were doing was not the right thing.”
The governor stated that his responsibility in office included making sure that Rivers people are not denied their entitlements.
He said it was unfortunate that FIRS allegedly resorted to writing threatening letters to intimidate corporate organisations to pay to them even after they had lost their appeal that sought a stay of execution of the declarative ruling on VAT collection in the State.
Governor Wike described the disparity in VAT proceeds and what was given to the States as an inexplicable form of injustice that weakens the performance potential of the states.
“Let me tell you the injustice in this country. In the month of June 2021, which we shared in July, VAT collected in Rivers State was N15.1billion. What they gave us was N4.7billion. See the gross injustice and these money includes contracts awarded by the Rivers State Government.
“This is not an issue of party, it is the issues of infraction of the constitution, issues of illegality. Look at Lagos, it is not the same party with me. In the month of June 2021, the VAT collected in Lagos was N46.4 billion but see what Lagos got, N9.3 billion. Have you seen the injustice in the country? VAT collected in Kano was N2. 8billion and they gave them N2. 8billion. Is there any justice in this country?”
Governor Wike described as morally offensive a situation where Rivers State government will award contracts for State roads worth N200 billion Naira and the FIRS will allegedly receive 7.5 percent of the amount as VAT to be distributed among the States.
“So you allow me to call the big companies, award contracts to them, then you, FIRS, come and collect the tax and then go and distribute it to other states who are not awarding contracts. How does it sound.”
The governor noted that nobody had been courageous to challenge the illegality perpetrated by FIRS and that history will be kind to Rivers State to have mustered the courage to speak out and also challenge it.
According to Governor Wike, Nigeria is a constitutional democracy and not a military government where rule of law is grossly disregarded.
“I overheard the FIRS chairman saying that I’ll soon know the power of the Federal Government. And that they’ll show me that they have the power to muzzle the judiciary. You can muzzle them as you want. Let the Court of Appeal and Supreme Court interpret the law so that all of us will go and rest.
“Use all the power you want to use, but history will be written one day and those who will allow themselves to be used to muzzle and misinterpret the law will face God one day.”
Governor Wike pointed out that it is not possible for all states to be at equal standing or be mechanically placed in position of performance without allowing them to exercise their rights within the condition.
He advocated that the federating states should be allowed to explore their creative abilities in utilising the functions as provided in the constitution in order to grow.
The governor added that “The powers have already been devolved in the constitution but the federal government does not allow us. All they want us to do is to come and beg and I say I will not beg. Give me what the law says I should get.”
September 9, 2021
Wike Orders Rivers Agency To Fully Enforce VAT Collection
Rivers State Governor, Nyesom Wike, has ordered the Rivers State Revenue Service (RSRS) to fully implement the State Value-Added Tax Law 2021 which he assented to recently.
This follows the failure of the Federal Inland Revenue Service (FIRS) to stop the state government from collecting VAT, having filed an application at a Federal High Court in Port Harcourt, the state capital.
“With today (Monday’s) judgement, the way is now clear for the administration and enforcement of the Rivers State Value-Added Tax Law 2021 across the entire state until otherwise decided and set aside by the superior courts,” the governor said in a statewide broadcast on Monday, hours after the court refused the suit by FIRS.
“Consequently, I hereby direct the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities, and individuals with immediate effect.
“Let me warn that the Rivers State government is fully in charge of the state and will not tolerate any further attempt by the FIRS to sabotage or undermine our authority to freely administer our tax and other related laws in our own state. Those who play with fire risk having their fingers burnt; enough of the shenanigans.”
Governor Wike also directed all corporate bodies, business entities, and individuals in Rivers to willingly, truthfully and promptly comply with their tax obligations under the law.
He warned that those who fail in such responsibilities risk sanctions, including having their business premises sealed up by the government.
The governor assured residents that his administration would effectively use the expected proceeds from the collected tax to accelerate the development of the state and improve their well being.
He explained that the enactment of the VAT law followed a recent judgement of the court that upheld the constitutional right and authority of state governments to impose, collect, and utilise VAT within their respective territorial jurisdictions.
“As expected, the Federal Government, through the Federal Inland Revenue Service (FIRS), disagreed and filed an appeal coupled with a request for stay-of-execution of the judgment before the Federal High Court.
“While the appeal was pending and without any stay-of-execution of the subsisting judgement, the FIRS went about to bully corporate bodies and business entities from paying the VAT to the Rivers State government, even when they knew that an appeal does not serve as a stay, neither was there anything to stay in a declaratory judgement,” Governor Wike said.
“As a mere agency of the Federal Government without any political authority, the effrontery and impunity exhibited by the FIRS against the Rivers State government were ill-advised and highly provocative.”
He stated that the government had decided to suspend the enforcement of the VAT Law pending the outcome of the FIRS’s application for stay-of-execution.
According to the governor, the state did no wrong in exercising its legal right under a constitutional democracy to stop the continuing breach, denial, and curtailment of the constitutional right of states to lawfully impose and collect value-added and other related taxes within their jurisdiction.
He said the objective of such action was to contribute to the advancement of fiscal federalism by enabling the federating states to explore their potential and capacity for generating greater internal revenues.
Governor Wike, however, admitted that some states with presently low economic activities and ethically restrictive social policies with economic implications may be adversely affected for now.
“Above all, fiscal federalism remains the right path to economic self-reliance and sustainability for all our states and the benefits derivable from this case by all the states in the long run far outweigh the immediate revenue loss that some states may presently suffer,” he said.
Prior to the governor’s broadcast, Justice Stephen Dalyop Pam refused the application by FIRS, seeking to stop the Rivers State government from collecting VAT.
He held that the revenue agency failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly and signed by Governor Wike on August 19, therefore, the state law on VAT was valid and subsisting.
September 6, 2021
BREAKING: Open-grazing ban, VAT bills scale second reading at Lagos Assembly
The Lagos State House of Assembly on Monday committed the bill on open grazing ban to the Committee on Agriculture after it scaled second reading.
The legislators also read for the first and second time, the Lagos Value Added Tax (VAT) bill and asked the Committee on Finance to give a report on Thursday.
Speaker Mudashiru Obasa described the ‘Prohibition of Open Cattle Grazing Bill’ as one that would ensure a harmonious relationship between herders and farmers, and protect the South-West environment.
Obasa suggested that the proposal should make provision for the registration of herders and prepare them for ranching.
On the VAT bill, the Speaker said it would lead to an increase in revenue and infrastructure development in line with fiscal federalism.
He urged the Lagos government to do everything legally possible to ensure that the judgement of a Federal High Court in Port Harcourt is sustained up to the Supreme Court.
Obasa lamented that while the state generates about N500 billion annually and others in the South-West generate around N300 billion, they are all paltry amounts to the federal government.
Bisi Yusuff, representing Alimosho 1 lamented the havoc herdsmen have caused in the region.
He said farmers are now afraid to visit their farms, with many now indebted because it is difficult to pay back loans.
Yusuff condemned cattle roaming, the fear and accidents they cause, and advocated stiffer penalties for herders carrying firearms.
Kehinde Joseph (Alimosho 2) called open grazing in the 21st century an aberration.
Joseph said the bill would ensure peaceful coexistence, reduce crime and help to guide the activities of herders.
Olumoh Lukman (Ajeromi-Ifelodun 1) suggested that the High Court or a Special Court handle cases from the enforcement of the bill when passed and signed.
Gbolahan Yishawu (Eti Osa 2) decried how cows move about in a city like Lagos and confirmed the state has 250 hectares of land in Ikorodu and another 750 hectares on Epe for ranching.
Tobun Abiodun (Epe 1) said it was common to see cattle going to school as if they want to learn.
David Setonji (Badagry 2) recalled a time the lawmakers went to a school on an official visit, “We were embarrassed by cattle. We had to wait for the herder to move the cattle before we embarked on our oversight function”, Setonji added.
September 6, 2021
Court Refuses FIRS Application To Stop Rivers Govt From Collecting VAT
Justice Stephen Dalyop Pam of the Federal High Court in Port Harcourt, Rivers State on Monday refused an application by the Federal Inland Revenue Service (FIRS), seeking to stop the Rivers State Government from collecting Value Added Tax (VAT).
The Federal Inland Revenue Service filed the application in mid-August against the judgment of the same court which had on August 9 ruled that the Rivers State Government, and not the Federal Inland Revenue Service, is entitled to collect Value Added Tax and Personal Income Tax in Rivers State’s territory.
The judgment was delivered in a suit filed by the Attorney General of Rivers State against the Federal Inland Revenue Service and the Attorney General of the Federation.
Not satisfied with the judgment, the FIRS approached an Appeal Court to challenge the ruling.
While the appeal was yet to begin, the revenue collection agency returned to the same Federal High Court in Port Harcourt to seek a stay of execution on the court’s decision, pending the determination of their appeal.
In delivering his ruling on the application by the FIRS, Justice Stephen Dalyop Pam says FIRS failed to file an application to set aside the Rivers State Tax Law of 2021 which was recently enacted by the Rivers State House of Assembly and assented to by Governor Nyesom Wike on August 19, therefore the state law on Value Added Tax is valid and subsisting.
The judge also ruled that the Federal Government already has a huge liability arising from the many years it has collected the tax on behalf of Rivers State, therefore it may be a difficult task for the Federal Government to refund the state if his judgment authorizing the state to collect the tax is upheld at the appellate courts.
The judge believes that Rivers State can easily remit whatever amount it may have received within the litigation period to the Federal Government if it loses at the Appeal Court.
While the Counsel to the Rivers State Government hailed the ruling, the lawyer to the Federal Inland Revenue Service is hoping to get favourable judgment at the Appeal Court.
Meanwhile, Governor Nyesom Wike has ordered the Rivers State Revenue Service (RSRS) to fully implement the State Value-Added Tax Law 2021 which he assented to recently.
The governor gave the order in a broadcast, hours after the judgement.
“With today’s (Monday’s) judgement, the way is now clear for the administration and enforcement of the Rivers State Value-Added Tax Law 2021 across the entire state until otherwise decided and set aside by the superior courts,” he said, maintaining that the state did no wrong in exercising its legal right under a constitutional democracy to stop the continuing breach, denial, and curtailment of the constitutional right of states to lawfully impose and collect value-added and other related taxes within their jurisdiction.
“Consequently, I hereby direct the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities, and individuals with immediate effect.
“Let me warn that the Rivers State government is fully in charge of the state and will not tolerate any further attempt by the FIRS to sabotage or undermine our authority to freely administer our tax and other related laws in our own state. Those who play with fire risk having their fingers burnt; enough of the shenanigans.”
Justice Stephen Dalyop Pam of the Federal High Court in Port Harcourt, Rivers State on Monday refused an application by the Federal Inland Revenue Service (FIRS), seeking to stop the Rivers State Government from collecting Value Added Tax (VAT).
The Federal Inland Revenue Service filed the application in mid-August against the judgment of the same court which had on August 9 ruled that the Rivers State Government, and not the Federal Inland Revenue Service, is entitled to collect Value Added Tax and Personal Income Tax in Rivers State’s territory.
The judgment was delivered in a suit filed by the Attorney General of Rivers State against the Federal Inland Revenue Service and the Attorney General of the Federation.
Not satisfied with the judgment, the FIRS approached an Appeal Court to challenge the ruling.
While the appeal was yet to begin, the revenue collection agency returned to the same Federal High Court in Port Harcourt to seek a stay of execution on the court’s decision, pending the determination of their appeal.
In delivering his ruling on the application by the FIRS, Justice Stephen Dalyop Pam says FIRS failed to file an application to set aside the Rivers State Tax Law of 2021 which was recently enacted by the Rivers State House of Assembly and assented to by Governor Nyesom Wike on August 19, therefore the state law on Value Added Tax is valid and subsisting.
The judge also ruled that the Federal Government already has a huge liability arising from the many years it has collected the tax on behalf of Rivers State, therefore it may be a difficult task for the Federal Government to refund the state if his judgment authorizing the state to collect the tax is upheld at the appellate courts.
The judge believes that Rivers State can easily remit whatever amount it may have received within the litigation period to the Federal Government if it loses at the Appeal Court.
While the Counsel to the Rivers State Government hailed the ruling, the lawyer to the Federal Inland Revenue Service is hoping to get favourable judgment at the Appeal Court.
Meanwhile, Governor Nyesom Wike has ordered the Rivers State Revenue Service (RSRS) to fully implement the State Value-Added Tax Law 2021 which he assented to recently.
The governor gave the order in a broadcast, hours after the judgement.
“With today’s (Monday’s) judgement, the way is now clear for the administration and enforcement of the Rivers State Value-Added Tax Law 2021 across the entire state until otherwise decided and set aside by the superior courts,” he said, maintaining that the state did no wrong in exercising its legal right under a constitutional democracy to stop the continuing breach, denial, and curtailment of the constitutional right of states to lawfully impose and collect value-added and other related taxes within their jurisdiction.
“Consequently, I hereby direct the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities, and individuals with immediate effect.
“Let me warn that the Rivers State government is fully in charge of the state and will not tolerate any further attempt by the FIRS to sabotage or undermine our authority to freely administer our tax and other related laws in our own state. Those who play with fire risk having their fingers burnt; enough of the shenanigans.”
September 6, 2021
FIRS Insists on Collecting VAT, Warns Taxpayers against Default
The Federal Inland Revenue Service (FIRS) has directed taxpayers in the country to continue to pay their Value Added Tax (VAT) to it or risk penalties for failing to do so.
The FIRS said it decided to issue the directive following numerous enquiries in view of a recent court ruling obtained by Rivers State at a Federal High Court, Port Harcourt, that states, and not the federal government, are constitutionally empowered to collect VAT.
The FIRS, in a statement titled, “Rivers Judgment: FIRS Urges Taxpayers to Continue to Pay VAT,” argued that since it had already appealed the Rivers judgment seeking a stay of execution order, the status quo ante subsists on the VAT collection authority, hence taxpayers should continue to pay their VAT to it.
The statement issued by the Director, Communications and Liaison Department, FIRS, Abdullahi Ismaila Ahmad said the attention of the Service had been drawn to the trending report that on August 19, 2021, the Rivers State government took steps to enact a VAT Law for the state following the Judgment of the Federal High Court Port Harcourt Division on August 9, 2021 in Suit No: CS/149/2020.
It added: “The suit was about who has the constitutional duty for the collection of VAT and Personal income tax in Rivers State.
“We wish to inform the general public that, before the above-mentioned steps taken by the Government of Rivers State, the FIRS had lodged an appeal against the above judgment and had also filed an application for stay of execution on the judgment as well asking the Court for an injunction pending determination of the appeal.
“All parties to the suit are aware that both applications were heard on the 19th and 20th August 2021, and are awaiting the decision of the Court.
“Given that the Court of Appeal is yet to rule on the Appeal from the judgement of Federal High Court and that the Federal High Court is yet to deliver a ruling on FIRS’s applications for stay of execution and injunction, members of the public are advised to continue to comply with their Value Added Tax obligations until the matter is resolved by the appellate courts,” the FIRS said.
August 23, 2021
FIRS Appeals Court Judgment on VAT Collection
The Federal Inland Revenue Service (FIRS) has appealed a recent judgment of a Federal High Court in Port Harcourt, Rivers State on the issue of who has the constitutional mandate to collect Value Added Tax (VAT).
The Court presided over by Justice Stephen Pam held that there was no constitutional basis for the FIRS to demand and collect VAT, Withholding Tax, Education Tax and Technology Levy in Rivers or any other state of the federation, maintaining that the constitutional powers and competence of the federal government was limited to taxation of incomes, profits and capital gains, which does not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusi
Following the judgement, the FIRS had promptly vowed to challenge the ruling. To make good its position, the agency
disclosed in a statement by its Director, Communications and Liaison Department, Abdullahi Ismaila Ahmad that it had appealed the court judgement.
The statement read: “This is to inform the general public that the Federal Inland Revenue Service has lodged an appeal against the judgment of the Federal High Court Port Harcourt Judicial Division delivered by Honourable Justice Stephen Pam, in SUIT NO. FHC/PH/CS/149/2020-ATTORNEY GENERAL OF RIVERS STATE v. FEDERAL INLAND REVENUE SERVICE & ANOTHER.
“We have also sought an injunction pending appeal and a Stay of Execution of the said judgment.
“As the decision is being appealed and in view of the pending applications for injunction and stay of execution which the FIRS has filed in court against the judgement, members of the public are advised to continue to comply with the Value Added Tax obligations until the matter is resolved by the appellate courts in order to avoid accruing the consequent penalties and interest for non-compliance.”
“As the decision is being appealed and in view of the pending applications for injunction and stay of execution which the FIRS has filed in court against the judgement, members of the public are advised to continue to comply with the Value Added Tax obligations until the matter is resolved by the appellate courts in order to avoid accruing the consequent penalties and interest for non-compliance.”
August 15, 2021
VAT collections hit N454.69b in Q4 – NBS
The Federal Inland Revenue Service (FIRS) collected Value Added Tax (VAT) worth N454.69 billion in the fourth quarter (Q4) of 2020.
It is 7.06 per cent increase over the N424.71 billion collected in the preceding quarter of the same year.
The National Bureau of Statistics (NBS) made this known in its Sectoral Distribution of Value Added Tax (Q4 2020) report.
The data said: “Sectoral distribution of Value Added Tax (VAT) data for Q4 2020 reflected that the sum of N454.69bn was generated as VAT in Q4 2020 as against N424.71billion generated in Q3 2020 and N308.48billion generated in Q4 2019 representing 7.06 per cent increase Quarter-on-Quarter and 47.39 per cent increase Year-on-Year.”
NBS said out of the total amounted generated in Q4 2020, N212.52 billion was generated as Non-Import VAT locally while N143.35bn was generated as Non-Import VAT for foreign.
According the data, the balance of N98.81billion was generated as Nigeria Customs Service-Import VAT.
The document said Professional Services generated the highest amount of VAT with N42.38 billion generated and closely followed by other Manufacturing generating N39.45 billion, Commercial and Trading generating N21.15 billion while Mining generated the least and closely followed by Pioneering and Textile and Garment Industry with N58.88 million, N185.72million and N353.75million generated respectively.
January 27, 2021