VAT Collection Controversy Triggers Passion For Restructuring As FIRS Appeals Court Judgement

metro

5 years ago

… Experts Pick Holes In FIRS Argument

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.
But some experts disagree with the federal government agency saying the law is silent on who collects consumption or service tax, which is the value added tax while putting taxation generally under exclusive list.

Besides, they argue that the current agitation by Rivers and other states may have given passion to the lingering agitation for fiscal federalism or restructuring for which most Nigerians have been clamouring for

However, in a news conference in Abuja on Wednesday, 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.
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.
But speaking on channels Television, politics Today program on Wednesday
Taiwo Oyedele, Taxation expert with PWC said while he agreed that it might be cumbersome for states to effectively and efficiently collect the tax, there is need for amicable solution rather than states going ahead to promulgate laws as soon as the court delivered the judgement.

He however said the present arrangement where only 20 percent of collection is distributed based on derivation with the rest based on equity and population is not healthy.

Lagos and Rivers state’s are major contributors to the VAT with Lagos accounting for between 60 to 65 percent and as such solution must have to be provided for adequate collection and administration

Kayode Ajulo, lawyer, who was also on the program says while tax is on exclusive list, the law is silent on who collects VAT, being a service based tax.

According to Ajulo, as at today, the law recognises only Rivers or states as legal institutions to collect the VAT.

The equity aspect, according to Ajulo requires usage of the resources from where the services are rendered or consumed, adding that the location of where the services are consumed should be considered..

According to him, this is the essence of fiscal federalism or restructuring, stressing that one . must enjoy from the state he or she is working.

According to him, the argument of FIRS may not be legal in the eyes of the law, because it is the location where the goods or services are consumed that should be considered.

According to another expert, the practice of VAT Collection and distribution is against the law of equity and natural justice.

Besides, it encourages mediocre and laziness on the part of some Governors who have refused to think outside the box to enhance their internally generated revenue.

VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 percent.