Ondo to residents: We are collecting consumption tax — not VAT

The Ondo state government says it has begun the collection of consumption tax from residents in a bid to boost internally generated revenue (IGR).

Tolu Adegbie, executive chairman of the Ondo State Internal Revenue Service (ODIRS), clarified that consumption tax is different from value-added tax (VAT).

Adegbie explained that the consumption tax law was passed by the Ondo house of assembly and signed into law in 2019, however, its implementation was suspended in 2020 due to the COVID-19 pandemic that disrupted economic activities.

“The implementation of consumption tax law has started now. We have written to hotels in the state but some are still confused saying that this tax is the same as VAT,” he said.

“They are not. While they may both be a consumption tax. One is based on sales while the other is on value on transaction. This is only for hotels and restaurants.

“So those hotels writing to us that VAT case is in court should know that this one is not in court. It’s not subjected to litigation.”

On VAT collection, Adegbie said since the legal battle is already in the supreme court, Ondo would implement whatever the law says.

“We will implement the law that has been passed by the state and we have done our research and we have passed our observation and at the appropriate time, the government will take a decision,” he added.

“But if the VAT case is won in court in favour of the state, what happens? It means that we will be collecting VAT.”