EXCLUSIVE: FIRS lobbies lawmakers to put VAT on exclusive list

The Federal Inland Revenue Service (FIRS) has asked the national assembly to include value-added tax (TAX) collection in the exclusive legislative list.

TheCable understands that the move will grant the agency exclusive power to collect VAT.

Recently, a federal high court in Port Harcourt issued an order restraining the FIRS from collecting value-added tax (VAT) and personal income tax (PIT) in Rivers state.

The federal tax authority has appealed the ruling.

In a letter sent to the national assembly, the FIRS told the house of representatives that the requests would increase revenue generation for the government.

It also sought the need to exclusively include all adjudication of tax disputes, including federal tax laws, companies income tax, petroleum tax, income tax, capital gain tax, stamp duty, VAT and taxes and levies as well as other laws, regulations, proclamations, government notices and rules to the federal collector.

“The Federal Inland Revenue Service (FIRS) proposes for the insertion of value-added tax immediately after Stamp Duties under item 58 part II of 2nd schedule of the 1999 Constitution of the FRN,” the letter reads.

VAT COLLECTION JURISDICTION

Although the position of the law is clear, the case is a dicey one, according to the Chartered Institute of Taxation of Nigeria (CITN). The professional group cited two cases where courts had declared some provisions of the VAT Act unconstitutional.

Despite several cases determined by high courts, the supreme court has never had a judgement on the fundamental issue of VAT collection or the VAT act.

In Emmanuel Chukwuka Ukala v. FIRS & A.G. FEDERATION in Suit No. FHC/PH/CS/30/2020, Justice I. O. Oshomah, at the Portharcourt division of the federal high court, on December 11, 2020, expressly held that the National Assembly had no power to enact the VAT Act.

The court had also nullified the VAT Act.

Checks by TheCable also showed that Part II of the concurrent legislative list of the Second Schedule of the 1999 constitution as amended, delegates the collection of taxes to the state government or other authority of the State.

According to VAT Act, revenues accrued from VAT are shared between the federal (15 percent), state (50 percent) and local government (35 percent), with the board of FIRS taking responsibility for collection.

Notwithstanding, Nyesom Wike, governor of Rivers State, on Thursday, signed a bill on value-added tax (VAT) collection into law.

Explaining the State’s position, Wike questioned why the “state government would award a contract of N30 billion and 7.5 percent VAT (almost N3 billion) will now be deducted and paid to the federal government”.

“Now, look at 7.5% of N30billion of contracts we awarded to companies in Rivers State, you will be talking about almost N3billion only from that source. Now, at the end of the month, Rivers State government has never received more than N2billion from VAT. So, I have contributed more through the award of contract and you are giving me less. What’s the justification for it.”

He lamented plans by the FIRS to introduce road tax which would take away more duties from the states and further emasculating them financially.