Nyesom Wike: VAT palava between state vs FG and wetin you need to know about am

Federal goment of Nigeria say dem don file appeal against di court judgement wey go allow states to collect Value Added Tax (VAT).

Matthew Gbonjubola, Group Lead Special Taxation Federal Inland Revenue Service (FIRS) for press conference wit tori pipo for Abuja say to get a single tax authority wey dey manage taxing system go stop di challenge of double taxation.

“I fit confam to you say we don file appeal for di appellate court against di judgement at di lower court for di Appeal Court for Rivers state.

Make we leave like dis because na court matter. But make una just know sey we don appeal dat judgment,” Gbonjubola tok.

Dis wan dey come as di Rivers state Govnor, Nyesom Wike dey push for states to dey collect di value added tax as na dia right.

Dis wan don cause palava between di federal and state gomet ontop who suppose collect di tax.

How di palava start

Before now na di federal goment through di FIRS bin dey collect VAT.

But di Rivers State goment bin challenge di right of FIRS to collect VAT for court.

For inside one ogbonge ruling, di Federal High Court wey siddon for Port Harcourt, Rivers State, declare say di Rivers State goment and not di Federal Inland Revenue Services (FIRS), wey be agency of di federal goment, suppose collect Valued Added Tax (VAT) and Personal Income Tax (PIT) for di state.

Di court bin also issue order of perpetual injunction wey stop di FIRS and di Attorney General of di federation, both first and second defendants for di suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, personnel income tax and Value Added Tax.

‘FIRS no get right to collect VAT in di first place’

Di Rivers Governor say na injustice for states not to collect di right taxes ontop di revenue dem dey generate for dia states and dat one na im ginger dem to go test di law for court.

Im explain say, “For Rivers State, we award contracts to companies and within di last month, we pay over N30bn to di contractors and dem go deduct 7.5% from dat money give FIRS.

“Now, look at 7.5% of N30bn of contracts we award to companies for Rivers State, you go dey talk of almost N3bn only from dat source. Now, at di end of di month, Rivers State goment never ever receive more dan N2bn from VAT. So, I don contribute more through di award of di contracts but you dey give me less. Wetin be di justification for dat one?

According to di Rivers stat govnor, by di Constitution, no be federal goment through di Federal Inland Revenue Service FIRS suppose dey collect VAT and so dem bin wan try to amend di Constitution to allow dem to dey collect di Value Added Tax legally.

Governor Wike add say by di constitution, no be federal goment through di Federal Inland Revenue Service FIRS suppose dey collect VAT and so dem bin wan try to amend di constitution to allow dem to dey

collect di Value Added Tax legally.

Wetin be VAT?
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Wetin dis one mean for states?

Di Rivers Governor say na injustice for States not to collect di right taxes ontop di revenue dem dey generate for dia States and dat one naim ginger dem to go test di law for Court.

Im explain say, “For Rivers State, we award contracts to companies and within di last month, we pay over N30bn to di contractors and dem go deduct 7.5% from dat money give FIRS.

“Now, look at 7.5% of N30bn of contracts we award to companies for Rivers State, you go dey talk of almost N3bn only from dat source. Now, at di end of di month, Rivers State goment never ever receive more than N2bn from VAT. So, I don contribute more through di award of di contracts but you dey give me less. Wetin be di justification for dat one?

Meanwhile, di State goment don enact di Rivers State Value Added Tax Law 2021 to regulate di effective administration of VAT. Dis law give Rivers State goment di power to begin collect VAT for di State.

Oda States like Lagos State goment don also tok say dem too go begin implement di court judgement wey Rivers State goment win ontop VAT collection.

Di Lagos State Commissioner for Information, Gbenga Omotosho tell tori pipo say dem go soon send bill to di State Assembly to adjust dia own law wey go enable dem begin collect di VAT.

Wetin be Value Added Tax?

Value Added Tax na money wey dey charged on di supply of goods and services in Nigeria, including di ones dem import into di kontri, except di goods and services wey specifically dey exempted under di VAT Act.By di Finance Act of 2020, wey take effect from February 1, 2020, di Value Added Tax wey dey charged on affected goods and services rise from 5% to 7.5%.

Before dis court judgment, na FIRS wey be agency of federal goment, na im get di responsibility to collect VAT on behalf of di 36 states of di federation and di Federal Capital Territory.

Di amount dem collect go dey shared among di three tiers of goment, and federal goment go take 15%, states go take 50% and local goments dey take 35%.