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FIRS Appeals Historic Court Verdict on VAT

The Federal Inland Revenue Service (FIRS) has filed an appeal against the judgement of a Federal High Court in Port Harcourt, the Rivers State capital, barring the organization from collecting the value added tax (VAT), according to a report by ThisDay newspaper.

Zainab Ahmed, Nigeria’s Minister of Finance

The Federal High Court had ruled that Rivers State Government, not FIRS, should collect VAT and Personal Income Tax (PIT) in the state.

When this judgement travels the full course and gains final validation of Court (in Nigeria, at the Supreme Court), revenues under the control of the  federal government are expected to decline in excess of  N1.5 trillion annually, as a result of lost collections across the federating States of Nigeria.

The court presided over by Justice Stephen Pam held that there was no constitutional basis for the FIRS to demand and collect VAT, Withholding Tax, Education Tax, and Technology Levy in Rivers or any other state of the federation.

It maintained that the constitutional powers and competence of the federal government were limited to taxation of incomes, profits and capital gains, which did not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution of the Federal Republic of Nigeria (as amended).

In a statement by its Director, Communications and Liaison Department, Abdullahi Ismaila Ahmad, yesterday, the FIRS said it had appealed the court judgement, titled SUIT NO. FHC/PH/CS/149/2020-ATTORNEY GENERAL OF RIVERS STATE v. FEDERAL INLAND REVENUE SERVICE & ANOTHER.

“We have also sought an injunction pending appeal and a Stay of Execution of the said judgement, Mr. Ahmad stated.

The Federal High Court had issued an order of perpetual injunction restraining FIRS and the Attorney General of the Federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, Personal Income Tax and Value Added Tax.

Reacting to the development, Fiscal Policy Partner and Africa Tax Leader at PwC, Mr. Taiwo Oyedele, told THISDAY that the practice of the federal government collecting VAT and PIT on behalf of states had been going on because states did not have the capacity to collect them.

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