Lagos State Government joined the Rivers State Government earlier today and became the second State to enact its VAT Law in Nigeria. This event was indeed foreseen from Monday, September 6, 2021, when the Federal High Court (FHC) sitting at Port Harcourt, Rivers State in Attorney General for Rivers State v. FIRS & Another, refused to grant the FIRS’ application for the stay of execution of the August 9, 2021 decision of the FHC. The FHC had on August 9, 2021, declared the VAT Act 1993 (as amended), unconstitutional. Although the FHC’s August 9, 2021 decision was in the manner of a declaration of the law, in which case nothing was to be executed or executable, yet the FIRS had proceeded to apply for the stay of execution, apparently seeing the implication of the August 9, 2021 decision on its VAT revenue collection mandate for the Federation.
Having collected slightly in excess of N1trillion VAT as at H1 2021, our forecast using the ARIMA model was that FIRS should close its total 2021VAT collections at almost N2.2trillion. We could as well kiss goodbye to the forecast in the face of the ongoing VAT wars. Numbers should not lie. They should be as objective as the simplicity in which they are presented. Rivers State and Lagos State that currently lead the charge in the bid to collect their VAT revenues are 4th and 1st respectively in the VAT allocation schedule for the last 4 years. Please see Table 1 below. Clearly, their projections and bid is that they can collect more VAT from their territories than currently allocated to them by the current VAT pool sharing arrangement.
Table 1: 2017 to 2020 VAT Allocations to States (excluding Local Governments)
| STATES | 2020 | 2019 | 2018 | 2017 | Grand Total | Rank |
| LAGOS | 101,228,612,223.95 | 92,415,488,722.36 | 90,821,985,031.46 | 79,681,872,430.08 | 364,147,958,407.85 | 1st |
| KANO | 25,562,205,690.31 | 21,022,241,383.10 | 19,540,497,055.20 | 20,497,223,394.79 | 86,622,167,523.40 | 2nd |
| OYO | 20,928,492,650.73 | 17,763,969,957.03 | 16,685,047,748.40 | 15,781,314,993.98 | 71,158,825,350.14 | 3rd |
| RIVERS | 18,781,265,205.95 | 15,754,484,814.83 | 16,343,541,681.74 | 17,847,304,941.01 | 68,726,596,643.53 | 4th |
| KADUNA | 16,917,863,358.19 | 14,878,985,802.47 | 14,566,402,771.95 | 13,431,506,164.13 | 59,794,758,096.74 | 5th |
| KATSINA | 17,520,038,776.04 | 14,672,124,228.64 | 13,934,235,655.37 | 12,444,097,528.83 | 58,570,496,188.88 | 6th |
| DELTA | 14,681,602,247.87 | 13,565,466,459.61 | 12,484,868,981.05 | 11,184,219,950.47 | 51,916,157,639.00 | 7th |
| JIGAWA | 14,523,557,686.94 | 12,780,831,420.16 | 12,381,157,768.16 | 11,142,121,353.38 | 50,827,668,228.64 | 8th |
| AKWA IBOM | 14,737,129,121.70 | 12,760,857,922.76 | 11,970,120,634.02 | 10,549,360,394.90 | 50,017,468,073.38 | 9th |
| BAUCHI | 13,569,207,904.64 | 12,182,578,663.25 | 12,007,910,880.69 | 11,261,470,507.40 | 49,021,167,955.98 | 10th |
| BORNO | 14,233,462,211.49 | 12,209,714,698.95 | 11,645,763,100.00 | 10,645,446,781.49 | 48,734,386,791.93 | 11th |
| ANAMBRA | 13,441,693,578.60 | 12,088,950,552.74 | 11,904,952,759.82 | 10,961,533,077.09 | 48,397,129,968.24 | 12th |
| IMO | 13,836,687,962.20 | 12,189,785,607.64 | 11,582,114,598.68 | 10,586,022,105.57 | 48,194,610,274.10 | 13th |
| NIGER | 13,769,172,994.06 | 12,009,421,795.99 | 11,529,731,929.53 | 10,594,202,066.48 | 47,902,528,786.05 | 14th |
| BENUE | 13,493,387,718.70 | 11,937,770,779.80 | 11,569,532,928.27 | 10,762,066,789.72 | 47,762,758,216.49 | 15th |
| OGUN | 12,870,157,306.85 | 12,032,863,794.89 | 12,032,097,913.50 | 10,751,046,135.81 | 47,686,165,151.05 | 16th |
| OSUN | 13,690,222,553.72 | 11,671,159,791.34 | 11,080,115,620.43 | 10,066,550,587.46 | 46,508,048,552.96 | 17th |
| SOKOTO | 12,907,683,585.54 | 11,363,909,818.98 | 11,000,446,194.82 | 10,225,573,265.55 | 45,497,612,864.88 | 18th |
| EDO | 11,569,246,946.17 | 11,168,334,835.57 | 11,199,301,671.77 | 10,447,881,317.93 | 44,384,764,771.43 | 19th |
| ENUGU | 11,772,442,938.86 | 10,985,036,074.77 | 10,765,926,292.80 | 10,334,678,697.39 | 43,858,084,003.81 | 20th |
| KOGI | 12,046,813,892.84 | 10,802,820,970.35 | 10,648,127,201.36 | 9,885,532,503.21 | 43,383,294,567.76 | 21st |
| ONDO | 11,697,879,314.88 | 10,806,519,969.74 | 10,663,454,525.97 | 10,089,254,148.43 | 43,257,107,959.02 | 22nd |
| KEBBI | 11,945,274,717.48 | 10,740,148,705.36 | 10,627,127,412.13 | 9,820,339,309.96 | 43,132,890,144.92 | 23rd |
| ADAMAWA | 12,020,302,570.00 | 10,690,469,964.04 | 10,557,494,867.01 | 9,853,498,475.18 | 43,121,765,876.21 | 24th |
| PLATEAU | 11,346,698,072.94 | 10,408,805,140.54 | 10,432,257,478.53 | 9,944,724,117.99 | 42,132,484,810.01 | 25th |
| ZAMFARA | 10,680,684,756.18 | 10,029,282,600.00 | 10,130,776,461.76 | 9,706,571,789.03 | 40,547,315,606.97 | 26th |
| ABIA | 10,721,947,797.50 | 9,990,543,210.70 | 10,058,507,649.53 | 9,456,663,630.36 | 40,227,662,288.09 | 27th |
| CROSS RIVER | 10,951,518,856.39 | 10,084,146,688.54 | 10,040,231,149.25 | 9,591,634,962.37 | 40,667,531,656.55 | 28th |
| YOBE | 10,292,398,685.24 | 9,569,247,315.17 | 9,459,809,347.61 | 9,023,989,999.42 | 38,345,445,347.44 | 29th |
| EKITI | 10,091,248,454.08 | 9,452,727,933.76 | 9,438,394,064.58 | 8,972,419,154.64 | 37,954,789,607.06 | 30th |
| KWARA | 10,097,810,682.89 | 9,344,929,496.59 | 9,466,445,451.32 | 8,999,891,563.48 | 37,909,077,194.29 | 31st |
| TARABA | 9,997,823,332.80 | 9,252,249,581.03 | 9,320,964,291.03 | 9,034,210,804.65 | 37,605,248,009.51 | 32nd |
| EBONYI | 9,906,408,077.76 | 9,143,069,317.96 | 9,314,286,985.48 | 8,935,748,159.04 | 37,299,512,540.25 | 33rd |
| GOMBE | 9,251,901,679.75 | 8,914,343,814.12 | 9,141,059,315.05 | 8,984,123,486.69 | 36,291,428,295.61 | 34th |
| NASSARAWA | 8,893,148,052.07 | 8,591,545,105.10 | 8,741,356,701.61 | 8,578,821,975.63 | 34,804,871,834.42 | 35th |
| BAYELSA | 7,979,357,383.55 | 8,134,926,920.88 | 8,770,920,188.62 | 9,229,859,247.60 | 34,115,063,740.65 | 36th |
| TOTAL | 557,955,348,988.84 | 501,409,753,858.75 | 491,856,964,308.49 | 459,302,775,811.14 | 2,010,524,842,967.21 |
Source: National Bureau of Statistics
Thus, the challenge before Lagos State will be for it to collect more than the N8.4billion monthly average VAT it was allocated in 2020 and Rivers State, its 2020 monthly average N1.5billion VAT allocation. This will be easier said than done given the amount of work the States will need to put in, to, both in the short and long run, out-perform what they used to collect from the Federal VAT pool that FIRS and the Nigeria Customs Service (NCS) sat over. Yes, the VAT pool is far more than the VAT collected from the territories of each State (Local VAT). Local VAT which constitutes about 50% of VAT collections in the 4-year period 2017 to 2020. The other constituents of the VAT pool are Foreign VAT (28%) and Import VAT (23%). Import VAT is administered by the NCS. Please see Table 2 below. It is arguable for the Federal Government that States that choose to administer and collect their Local VAT may be unable to partake in the allocation of Foreign VAT and Import VAT, both of which, by the fact that they are derived from international commerce, are, arguably within the jurisdiction of the Federal Government to administer.
Table 2: 2017 to 2020 Sectoral VAT Collections
| SECTORS | 2017 | 2018 | 2019 | 2020 | TOTAL | RANK |
| Other Manufacturig | 119,601,368,176.23 | 122,897,161,774.27 | 124,142,611,667.71 | 154,153,558,587.70 | 520,794,700,205.91 | 1st |
| Professional Services | 87,523,201,728.90 | 86,282,476,643.53 | 112,060,151,115.46 | 162,318,807,473.91 | 448,184,636,961.80 | 2nd |
| Commercial and Trading | 49,503,756,607.71 | 63,062,351,082.17 | 59,807,465,995.39 | 77,437,296,178.14 | 249,810,869,863.41 | 3rd |
| State Ministries & Parastatals | 40,885,060,921.19 | 42,951,632,774.50 | 41,908,113,523.00 | 59,038,998,114.13 | 184,783,805,332.82 | 4th |
| Breweries.Bottling and Beverages | 35,709,303,507.11 | 35,927,693,179.37 | 40,737,606,465.05 | 59,692,218,396.30 | 172,066,821,547.83 | 5th |
| Oil Producing | 45,131,043,970.77 | 37,447,876,474.86 | 38,792,653,955.47 | 43,381,531,776.21 | 164,753,106,177.31 | 6th |
| Federal Ministries & Parastatals | 20,439,822,795.21 | 19,443,151,404.00 | 34,803,989,509.44 | 26,266,442,445.39 | 100,953,406,154.04 | 7th |
| Transport and Haulage Services | 15,811,631,083.17 | 7,915,905,446.25 | 24,348,817,028.43 | 43,513,031,942.74 | 91,589,385,500.59 | 8th |
| Banks & Financial Institutions | 20,756,588,124.17 | 18,497,761,535.40 | 17,152,731,227.54 | 24,769,287,182.28 | 81,176,368,069.39 | 9th |
| Other VAT | 9,781,216,716.94 | 12,937,258,242.86 | 15,137,910,700.28 | 22,903,174,307.74 | 60,759,559,967.82 | 10th |
| Building and Construction | 13,278,604,753.38 | 10,003,531,653.79 | 10,175,905,922.89 | 11,385,042,309.28 | 44,843,084,639.34 | 11th |
| Pioneering | 5,904,203,441.45 | 7,991,733,925.06 | 10,278,840,043.44 | 8,656,508,890.27 | 32,831,286,300.22 | 12th |
| Oil Marketing | 6,432,386,721.02 | 7,731,343,828.26 | 8,546,777,521.61 | 9,588,342,933.89 | 32,298,851,004.78 | 13th |
| Hotels and Catering | 4,964,184,630.45 | 6,289,942,007.33 | 8,290,374,422.12 | 8,309,086,574.58 | 27,853,587,634.48 | 14th |
| Stevedoring, Clearing and Forwarding | 3,708,324,631.12 | 5,134,412,580.58 | 5,632,850,492.25 | 9,106,663,881.76 | 23,582,251,585.71 | 15th |
| Conglomerates | 5,300,756,044.04 | 5,126,737,042.67 | 4,547,341,420.48 | 6,595,324,333.10 | 21,570,158,840.29 | 16th |
| Gas | 5,471,916,628.11 | 5,743,996,586.00 | 4,559,495,493.46 | 4,855,222,602.41 | 20,630,631,309.98 | 17th |
| Petro-Chemical and Petroleum Refineries | 4,872,244,802.94 | 4,660,800,148.43 | 4,073,539,432.00 | 5,873,655,282.39 | 19,480,239,665.76 | 18th |
| Properties and Investments | 3,069,882,922.11 | 4,158,314,186.65 | 4,041,394,099.76 | 4,536,476,245.55 | 15,806,067,454.07 | 19th |
| Offshore Operations | 2,271,217,381.59 | 2,562,038,924.66 | 2,713,437,659.70 | 3,918,345,163.40 | 11,465,039,129.35 | 20th |
| Agricultural and Plantations | 1,873,660,017.34 | 2,467,931,464.23 | 2,620,848,986.93 | 4,335,825,676.52 | 11,298,266,145.02 | 21st |
| Automobiles and Assemblies | 1,754,365,770.23 | 1,556,332,107.90 | 2,620,848,986.93 | 2,826,819,660.02 | 8,758,366,525.08 | 22nd |
| Publishing,Printing, Paper Packaging | 2,523,548,678.09 | 1,635,548,408.52 | 1,751,128,713.44 | 2,077,691,267.31 | 7,987,917,067.36 | 23rd |
| Chemicals, Paints and Allied Industries | 1,500,006,633.73 | 1,389,433,765.53 | 1,894,770,348.34 | 2,715,643,553.89 | 7,499,854,301.49 | 24th |
| Local Government Councils | 640,118,863.52 | 1,538,409,372.51 | 1,963,896,832.06 | 1,901,084,945.08 | 6,043,510,013.17 | 25th |
| Textile and Garment industry | 969,445,167.10 | 1,291,967,505.95 | 1,478,224,188.36 | 1,199,208,848.00 | 4,938,845,709.41 | 26th |
| Pharmaceutical,Soaps and Toileteries | 837,372,212.89 | 783,510,661.16 | 1,028,602,964.79 | 1,405,260,616.11 | 4,054,746,454.95 | 27th |
| Minning | 135,468,847.49 | 182,544,440.05 | 209,235,379.41 | 250,955,126.89 | 778,203,793.84 | 28th |
| Sub-Total (Non-Import) Local VAT | 510,650,701,778.00 | 517,611,797,166.49 | 584,609,102,319.83 | 763,011,504,314.99 | 2,375,883,105,579.31 | 50% |
| Sub Total (Non-Import) Foreign VAT | 259,697,238,991.58 | 286,295,631,908.06 | 359,455,169,732.32 | 420,434,545,941.57 | 1,325,882,586,573.52 | 28% |
| Sub-Total Import VAT (Nigeria Customs Service) | 202,000,466,759.64 | 304,133,137,122.02 | 240,516,307,311.72 | 347,724,759,663.72 | 1,094,374,670,857.10 | 23% |
| TOTAL | 972,348,407,529.22 | 1,108,040,566,196.57 | 1,184,580,579,363.87 | 1,531,170,809,920.28 | 4,796,140,363,009.93 |
Source: National Bureau of Statistics
As at today, the September 6, 2021, decision of the FHC in Attorney General for Rivers State v. FIRS & Another is the law. It empowers States with relevant VAT Laws to go collect the Local VAT in their territories. Only Rivers and Lagos States may be able to so do as yet. Until another order of a Court of coordinate jurisdiction as the Federal High Court or more appropriately, the higher Court of Appeal, FIRS will be unable to lawfully collect Local VAT in Rivers and Lagos States while the States will lawfully be able to do so. The VAT administration machineries in the newbies of Rivers and Lagos States are what to watch out for. Interesting times lie ahead as the VAT wars are yet to be over; at least until leadership really wakes up and takes charge. It is often said that governments are known to act decisively and have their way when they choose to. It can accordingly be concluded that given the sustenance of the current imbroglio, the central government of the day has simply chosen not to act. Perhaps the +N2.2trillion VAT that we forecasted was due to be collected and shared among the 3 tiers of Government in 2021 is really nothing to lose sleep over. Perhaps Rivers and Lagos States may, by their performances, prove FIRS’ inefficiencies. Perhaps, we are unto new discoveries.
