Continue VAT Collection in All States, Nigeria’s Finance Minister Directs FIRS

Nigeria’s Minister of Finance, Budget and National Planning, Zainab Ahmed, has directed the Federal Inland Revenue Service (FIRS) to continue the collection of value added tax (VAT) and advised all Nigerians to pay their VAT to FIRS until the appellate court rules otherwise.

The Rivers State Government had last month secured a major court victory over the federal government in the collection of VAT in the state, and had gone ahead, along with Lagos State, to enact necessary laws and agencies for the collection of the tax.

But the Abuja Division of the Court of Appeal on September 10 ordered all parties that had submitted themselves before the court to maintain status quo ante bellum pending the hearing of an application seeking to stay the judgment of the Federal High Court, Port Harcourt.

Following the Appeal Court ruling, the Organised Private Sector of Nigeria (OPSN), became confused, and desperately called on the federal government to clear the confusion.

Apparently in reaction, the Minister of Finance, in a newspaper advertorial on Thursday, stated the position of the federal government on the rulings, directing the FIRS to continue the collection.

The minister stated: “The tax-paying public has been confused about whom to pay VAT to as a result of the Federal High Court’s judgement in Suit No. FHC/PH/CS/149/2020.

“The Appeal Court’s ruling, halting the execution of the judgement of the Federal High Court required all parties to maintain the status quo ante bellum. As such, FIRS shall continue to administer VAT in all the states of the federation unless the appellate court rules otherwise.

“The ruling of the Court of Appeal, therefore, implores all taxpayers in all the states to continue to pay their VAT, and for the FIRS to continue to collect VAT on behalf of the government in compliance with the VAT Act.

She appealed to all parties to stop their litigations in the interest of the nation, stating that the economy had ominous challenges and needed the support of every Nigerian for it not to go under.

Ahmed said, “The uncertainty caused by the recent pronouncements of the Federal High Court, sitting in Rivers State and the subsequent enactment of Value Added Tax (VAT) laws by some states is unnecessary and very regrettable.

“The Nigerian economy, just as the economy of other nations, is facing serious challenges occasioned by the COVID-19 pandemic.”

According to her, “Government is facing serious revenue challenges and, therefore, this is not the time for litigations, but for all hands to be on deck, to pull through this difficult period.”

The ruling of the Court of Appeal, she said “has provided the much needed certainty, clarity, and consistency that will enable compliance without disruption to business while final resolution is awaited.”

She said the federal government “shall continue to update the tax-paying public on this matter as the proceedings unfold at the appellate courts. All businesses are hereby encouraged to continue with their lawful operations.”

The leaders of the Organised Private Sector of Nigeria (OPSN), had on September 17, spoken in one voice, urging the federal government to make a statement that would clear the VAT confusion.

They said that the reality and consequences of the controversy “portend grave danger for the business community and by extension, the fragile economic recovery the country had been witnessing in recent times.”

The OPSN, which is comprised of the Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), and the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Nigeria Association of Small Scale Industries (NASSI) and the Nigeria Association of Small and Medium Enterprises (NASMEs), said a statement from the federal government would give a clear direction to the business community.

It said it would also save them the dilemma of remitting their VAT to the wrong government that might necessitate double payment; it would also save them the consequence of paying penalty fees for withholding the remittance of their VAT beyond the due date of Tuesday, September 21, 2021.

The Chairman of the OPSN, Mr. Taiwo Adeniyi, said: “We want to pay the VAT. But it is for the government at the centre to make a pronouncement because we do not want the situation where we will pay the VAT to the FIRS and the court will later say that it is state governments that shall collect VAT. We are shouting that the government will give us a direction as to what to do. It is not even late as a pronouncement can be made on Tuesday, September 21.

Adeniyi said that the OPSN was seriously concerned about the consequences of the ongoing controversy over the right of the government to collect VAT in the country, adding that it would be an “aberration to punish businesses or make them suffer from the proverbial ‘two elephants fighting.”

He said the situation had created an environment of uncertainty, which would negatively affect business competitiveness and sustainability in the country.

The federal government, through the FIRS by virtue of the Value Added Tax Act of 1993, has been the sole collecting authority of VAT in Nigeria until the Rivers State Government’s court victory, which empowered it to collect VAT from businesses located in the state.

Bennett Oghifo

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