August 2021 VAT Compliance: What to Know and Do

  1. We take a break today from the VAT Politics and the Search for Focus series and the analytics that adorn it and torch on the more pressing issue of what you need to know and do with your August 2021 Value Added Tax (VAT) compliance.
  2. As you may know, you were ordinarily to have computed, remitted and filed your August 2021 VAT Returns before Tuesday, September 21, 2021. In actual fact and as at today the morning of Thursday, September 16, 2021, you are still exactly to do as you have always done in the circumstance that nothing has really changed despite the fast-moving currents. The VAT you have collected on behalf of FIRS is still payable to it.
  3. Since the publication of VAT Politics and the Search for Focus (Part 2) , the following new developments have been unearthed or happened in the ongoing VAT wars:
  • Nigeria’s Federal Inland Revenue Service (FIRS) had appealed the Monday, August 9, 2021, judgment of the Federal High Court (FHC) sitting at Port Harcourt, Rivers State in Attorney General for Rivers State v. FIRS & Another [BO4] at the Court of Appeal, Port Harcourt Judicial Division. Recall that it was this judgment that limited the taxing powers of the Federal Government of Nigeria (FGN) to the imposition and administration of only taxes on incomes, profits, capital gains and stamp duties. The judgment states that the FGN has no powers to impose and administer any other taxes including VAT, Withholding Tax
  • FIRS had earlier on August 27, 2021, filed an application for stay of execution of the FHC’s decision at the Court of Appeal. This application is different from the one that the FHC refused in its ruling of Monday September 6, 2021. In other words, FIRS maintained 2 applications for stay of execution, one at that FHC and one at the Court of Appeal. The FHC refused to grant FIRS a stay of execution on Monday September 6, 2021.
  • Lagos State Government came into the picture when by an application dated September 3, 2021, it sought to be joined as a co-Respondent with Rivers State at the Court of Appeal. I am unsure of the thinking behind the move!
  • On Friday, September 10, 2021, the Court of Appeal, recognizing the two formal applications before it (FIRS’ application for stay of execution and Lagos State’s application for joinder) side-stepped both and on hearing an oral application of the FIRS and the objections of Rivers and Lagos State, ordered the parties to “refrain from taking any action to give effect to the Judgment of the Federal High Court in Suit No. FHC/PH/CS/149/2020 Attorney General of Rivers State v. Federal Inland Revenue Service & Anor delivered on the 9th day of August 2021 pending the hearing and determination of the applications alluded to above.” The Court thereafter adjoined the proceedings to today, September 16, 2021 for the hearing of Lagos State’s application for joinder only.
  • On same Friday, September 10, 2021, Governor Babajide Sanwoolu of Lagos State signed the Lagos State VAT Bill into law.
  • On Tuesday, September 14, 2021, the Ogun State House of Assembly saw to the First and Second Reading of the Ogun State VAT Bill.
  • On same Tuesday, September 14, 2021, Rivers State Government appealed the decision of the Court of Appeal at the Supreme Court, Nigeria’s highest Court.
  • Although the Court of Appeal on Friday, September 10, 2021, did not expressly set aside the Monday, September 6, 2021, ruling of the FHC, it impliedly did when it asked the parties before it not to give effect to the August 9, 2021, judgement of the FHC pending the hearing and determination of the applications before it. Lagos State was before the Court of Appeal and the orders should bind it, even though it was yet to be formally joined to the Suit or its application for joinder denied. In other words, neither Rivers State nor Lagos State can presently impose and collect VAT pursuant to their respective Laws as that would be in violation of the Court of Appeal’s order.
  • It appears the order of the Court of Appeal may subsist for longer as the Court of Appeal had only set for hearing Lagos State’s application for joinder. FIRS’ formal application for stay of execution is still cooling.
  • For now, FIRS appears to have gagged Rivers and Lagos State by virtue of the Court of Appeal’s orders. This would not extend to other States, for example, Ogun that has advanced the beat of its war drums. Perhaps, FIRS may just drag every State to Court to avoid the splintering of its legal resources across Courtrooms in Nigeria. Perhaps, policy and law makers will take effective leadership and resolve this issue on the basis of equitable and sustainable economics and politics.

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