The states are pushing to collect VAT in line with the recent judgment of a Federal High Court in Port Harcourt, which gives that right to them. More states are weighing plans to demand Valued Added Tax (VAT) from businesses operating within their jurisdictions in a rare move that brings Nigeria closer to a true federalism. The states are pushing to collect VAT in line with the recent judgment of a Federal High Court in Port Harcourt, which gives that right to them.
Nigeria generated a sum of N496. 39 billion from VAT in the first quarter of 2021, a surge of 52.93 percent year-on-year compared with N324.58 billion recorded in the corresponding period of 2020. In the whole of 2020, Africa’s largest economy collected N1.53 trillion in VAT, according to data from the National Bureau of Statistics (NBS).
Aside from Lagos and Rivers, which have insisted on the implementation of the court judgment, a number of states, especially in the South, are said to be consulting with their Houses of Assembly and considering laws to give legal backing to VAT collection. It was learnt that one of the states in the Southwest would soon be making a pronouncement on the issue as its ministry of justice and legislature are working on a bill to that effect.
Already, in Lagos, the government is now a few steps away from actualising its push to VAT from business operators as a bill on this passed a second reading on Monday. This comes as the FIRS again on Monday lost in suit number FHC/PH/CS/149/2020, seeking a ‘stay of execution’ on the earlier judgment of the Federal High Court presided over by Stephen Dalyop Pam, that declared that it was the constitutional role of state governments to collect VAT, and not Federal Inland Revenue Service (FIRS).
Pam, in his ruling on the FIRS application for a ‘stay of execution,’ said granting the application would negate the principle of equity. He noted that the Rivers government through the state House Assembly had duly enacted Rivers State Value Added Tax Edict No. 4, 2021, which makes it a legitimate right of the state to collect VAT. According to the judge, every court in the country is constitutionally mandated to obey every legislation enacted by both the National and State Assemblies.
Meanwhile, the Lagos State government is now few steps away from actualising its push to collect VAT from business operators in line with the recent ruling of a Federal High Court in Port Harcourt. This is also as the court in Port Harcourt has dismissed a stay of execution plea brought to it by the FIRS, seeking to stop state governments from collecting VAT pending a pronouncement of an appellate court on the issue.
The state is also at the verge of making real the resolution of the Southern Governor’s Forum to outlaw open grazing in Nigeria’s Southern region, as a bill on anti-open grazing, on Monday, scaled second reading on the floor of the state House of Assembly.