VAT Politics and the Search for Focus

It has been a busy time for Nigeria’s Federal Inland Revenue Service (FIRS); not necessarily because of the increase in its 2021 Value Added Tax (VAT) collections (for the first time, it grossed +N1trillion in VAT collections in the first half of a year), more because of the many fights it’s embroiled in. One major fight is the bid by some States, led by Rivers and Lagos States, to take control of the collection and appropriation of VAT within their territories. Armed with the August 9, 2021 decision of Nigeria’s Federal High Court (FHC) sitting at Port Harcourt in Attorney General for Rivers State v. FIRS & Another, the States claim to their VAT revenue is that the Federal VAT Act 1993 (as amended) is unconstitutional. It would appear that Rivers State enacted its VAT Law No. 4 of 2021 on August 19, 2021 on the strength of the decision while Lagos State has promised that its VAT Law is in the offing. Earlier on December 11, 2020, same FHC sitting at Port Harcourt in Emmanuel Ukala v. FIRS & Another had held that the FIRS had no authority or jurisdiction to audit or investigate the Plaintiffs for VAT among other Federal taxes and that the appropriate tax authority is the Rivers State Board of Internal Revenue. Yet earlier, same FHC, this time, sitting in Lagos State had in October 2019, in Registered Trustees of Hotel Owners and Managers Association of Lagos v. Attorney General of the Federation & Another declared the charging provisions of the VAT Act (specifically Sections 1,2,4,5 and 12 thereof) unconstitutional.

Read More