• Bickering, as Lagos proposes six per cent VAT, 75% for state, councils 25%The battle for Value Added Tax between the Federal Inland Revenue Service and states got fiercer yesterday as Rivers State, spearheading the new wave of fiscal federalism with its August 10 court judgment, commenced full implementation of the state’s VAT law, while the federal tax agency in a desperate bid to retain the collection of VAT, has written the National Assembly, seeking the inclusion of VAT collection in the...
“The VAT law abrogated all sales taxes at the time it was enacted and upon the advent of the current democratic dispensation, the VAT decree became an Act of the National Assembly and it has remained so until now.” “That is why if you look at VAT today, after Lagos, because we have many ports in Lagos, FCT comes second because the majority of contract awards are from the federal ministries and VAT collected in respect of those ministries are from the Federal Government. It is extremely difficult, if not impossible, to operate VAT at sub-national level. And that is why there is no country in the world that does that.
“Corruption is not only about kickbacks, it is also about doing something illegally. We were in court in 2020. Then on July 1st, 2021, the chairman of FIRS wrote to the National Assembly through the office of the Deputy Speaker of the House of Representatives. Governor Wike urged the business community to be ready to pay VAT for the month of September 2021 and subsequent months to the Rivers State Internal Revenue Service. According to him, he has already assented to the Rivers State VAT law passed by the House of Assembly.
Governor Wike described as morally offensive a situation where Rivers State government will award contracts for state roads worth N200 billion and the FIRS will illegally receive 7.5 per cent of the amount as VAT to be distributed among the states. It added that an officer of the Service or any body who aids or abets the commission of any offence under the law commits an offence and is liable on conviction to imprisonment for a term of five years or a fine of 2,000,000.
He said: “Every area of accrued revenue has been taken over. If this VAT is collected and you are giving 25 per cent to the local councils, where the government resides, it is bad. The grassroots is where the government resides. Although, even the local government chairmen cannot be trusted with the revenue, some of us are there to monitor their activities to ensure that they do what is expected of them. This money is generated from their base and they should take the lion share.
There is no stalemate, manufacturers should follow the law as it is. Their lawyers should advise them.
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