The crisis over the Value Added Tax deepened on Wednesday with the Rivers State Governor, Nyesom Wike, ordering companies based in the state to start paying VAT to the state government.
Wike gave the order during a stakeholders’ meeting in Port Harcourt with representatives of Shell Petroleum Development Company and other oil companies as well as business owners in the state.
The governor, who accused the Federal Inland Revenue Service of threatening companies based in the state, said any organisation that failed to pay VAT to the state would be sealed off.
Similarly, the Lagos State Government said on Wednesday that a letter written by the FIRS to the National Assembly seeking inclusion of VAT on the exclusive legislative list would not stop the bill on the tax currently before the state House of Assembly.
The FIRS, in a bid to retain the collection of the tax, wrote to the National Assembly to seek the inclusion of VAT collection in the exclusive legislative list.
Last month, the Federal High Court sitting in Port Harcourt, in a judgment in suit number FHC/PH/CS/149/2020, held that the Rivers State Government had the powers to collect VAT within its territory.
Although the FIRS applied to the court for a stay of execution, Justice Stephen Pam rejected the application, saying granting it would negate the principle of equity.
The VAT crisis took a different dimension on Monday when a bill to empower the Lagos State Government to collect the tax scaled the second reading in the state House of Assembly.
On Tuesday, the Akwa Ibom State House of Assembly said it would soon start work on a bill to enable the state government to collect VAT.
A letter written by the FIRS to the National Assembly on the matter and signed by the Executive Chairman of the FIRS, Muhammad Nami, dated July 1, 2021, was addressed to the Chairman of the House Constitution Review Committee, who is also the Deputy Speaker of the House of Representatives, Idris Wase.
The letter, with reference number FIRS/EC/CWREP/0416/21/037, which was received by Wase’s office on July 2, was titled, ‘Request for sponsorship of a bill for the establishment of the proposed Federal Revenue Court of Nigeria and the insertion of Value Added Tax under item 58 of the exclusive legislative list’.
The federal tax agency specifically pleaded with the legislature to vest exclusively in it all adjudication of tax disputes, including federal tax laws, Companies Income Tax, Petroleum Tax, Income Tax, Capital Gain Tax, Stamp Duty, VAT, taxes, levies and other laws, regulations, proclamations, government notices and rules.
The letter read in part, “The Federal Inland Revenue Service further proposes the amendment of Section 251 (1) (b) of the Constitution of the FRN, 1999 (amended) by removing the exclusive jurisdiction of the Federal High Court only on anything connected or related to federal tax matters since same would be vested in the proposed federal revenue court.
“The Federal Inland Revenue Service also proposes the insertion of Value Added Tax immediately after Stamp Duties under item 58, part II of the 2nd schedule of the 1999 Constitution of the FRN.
“The Federal Inland Revenue Service appreciates the maximum cooperation and support we are receiving from your good office on tax matters generally.
“This has boosted our morale and determination to do more for the government in tax revenue generation.
“The FIRS therefore wishes to further request that the House of Representatives consider the request for the establishment of the Federal Revenue Court. “
