VAT: Rivers meets business leaders as law takes effect; Lagos passes own bill

Governor Nyesom Wike of Rivers State has interfaced with the business community in the oil-rich state, telling the heads of the corporates that with the infraction of the constitutional provision on collection of Valued Added Tax (VAT) addressed, his administration has commenced full implementation of the state’s VAT law without hesitation.

According to him, such understanding will enable them not to fall prey to the antics that could be deployed by the Federal Inland Revenue Service (FIRS) officials, who think they could use force to collect what does not belong to them.

Governor Wike explained that FIRS had in the past collected VAT in the state with impunity, knowing it was unconstitutional for them to do so.

He said his administration challenged the FIRS impunity in court, and the Federal High Court in Port Harcourt, in its declarative ruling, had stated the constitution is right in vesting powers to collect VAT in the state government within its jurisdiction.

He announced that the state government was going to inaugurate a Tax Appeal Commission which will be headed by a retired judge of the state.

Meanwhile, Lagos State House of Assembly has passed the state’s VAT law, empowering the state government to collect all VAT within its jurisdiction.

Tax and legal experts had earlier predicted that other federating states were likely to follow the Rivers example to challenge VAT collection by FIRS. With Lagos, by far the biggest VAT generator in the country, going ahead to exact its own VAT law, FIRS and the federal government are in for a hard battle with the sub-nationals.

Wike also alleged that FIRS wrote illegally to NASS on July 1, 2021, requesting for a constitutional amendment inserting VAT into the exclusive legislative list. Whereas Rivers had challenged the federal government through the office of the attorney-general and FIRS in court in 2020.

“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, 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. This is corruption. Corruption is not only engaging in kickbacks,” Governor Wike said.

He said his responsibility in office included making sure that Rivers people were not denied their entitlements.

He described as unfortunate that the FIRS resorted to writing threatening letters to intimidate corporate organisations to pay them, even after they had lost their appeal that sought a stay of execution of the declarative ruling on VAT collection in the state.

The Rivers governor 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, saying he had already assented to the Rivers State VAT law passed by the State House of Assembly.

Meanwhile, Governor Wike decried the alleged disparity in VAT proceeds sharing to the states, as an inexplicable form of injustice that weakens the performance potentials 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 N15.1 billion. What they gave us was N4.7 billion. See the gross injustice; and this money includes contracts awarded by the Rivers State Government. In Lagos, the VAT collected in Lagos in June 2021 was N46.4 billion, but Lagos got N9.3 billion. The VAT collected in Kano was N2.8 billion, and they gave them N2. 8 billion. Is there any justice in this country?” the governor retorted.

He lamented that Nigeria is a constitutional democracy, and not a military government where rule of law is grossly disregarded.

He challenged FIRS to allow the Court of Appeal and Supreme Court interpret the law in order to quell the VAT imbroglio.