August 2021 VAT Compliance: What to Know and Do

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:
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VAT Politics and the Search for Focus (Part 2)

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.

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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.

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