Tax Controversies: Rivers Insist on VAT Collection, FIRS Proposes Federal Revenue Court

In a letter signed by the Executive Chairman of the FIRS, Muhammad Nami, and dated July 1, 2021, which was addressed to the Chairman of the Constitution Review, who is also the Deputy Speaker of the House of Representatives, Idris Wase, FIRS requested the federal lawmakers to approve for it the establishment of a Federal Revenue Court of Nigeria.

The Face-off for Value Added Tax (VAT) between the Federal Inland Revenue Service (FIRS) and states got fiercer Wednesday as Rivers State, spearheading the new wave of fiscal federalism with its August 10 court judgment, commenced full implementation of the state’s VAT law, while the federal tax agency in a desperate bid to retain the collection of VAT, has written the National Assembly, seeking the inclusion of VAT collection in the exclusive legislative list.

The letter with references number FIRS/EC/CWREP/0416/21/037, was titled, ‘Request for sponsorship of a bill for the establishment of the proposed Federal Revenue Court of Nigeria and the insertion of Value Added Tax under item 58 of the exclusive legislative list’.

FIRS specifically pleaded with the National Assembly to vest, exclusively on it, all adjudication of tax disputes, including federal tax laws, companies income tax, petroleum tax, income tax, capital gain tax, stamp duty, VAT, taxes, levies and other laws, regulations, proclamations, government notices and rules. The VAT rate was raised from five to 7.5 per cent in 2020.

FIRS Group Lead, Special Tax Operations Group, Matthew Gbonjubola and his Digital and Innovation counterpart, Mrs. Chiaka Ben-Obi, giving insight into the position of the organisation in Abuja yesterday, said: “VAT came into being by virtue of the VAT Decree of 1993, which was a federal law. It came into effect in 1994, on January 1. According to the law establishing VAT, the FIRS is the legitimate authority to administer it.

“The VAT law abrogated all sales taxes at the time it was enacted and upon the advent of the current democratic dispensation, the VAT decree became an Act of the National Assembly and it has remained so until now.”

The Rivers State government, yesterday, said it is going ahead with full implementation of the state’s VAT.

Governor Nyesom Wike made this known during an interactive session with representatives of corporate organisations to clarify the position of the law to the business community in the state.

According to the governor, the clarifications on the position of law would enable the organisations not to fall prey to the antics that could be deployed by FIRS officials, “who think they could use force to collect what does not belong to them.”