The Nigerian government has stated that taxpayers across the nation should not stop paying value-added tax (VAT) to the Federal Inland Revenue Service (FIRS).
The information was issued by the Minister of Finance, Budget and National Planning, Zainab Ahmed on Thursday.
In August, a Federal High Court in Rivers state delivered a judgment preventing FIRS from collecting VAT and Personal Income Tax (PIT) and directed the Rivers state government to take charge of the collection.
The state governments of Rivers and Lagos, on the injunction of the court, established a law to impose and charge VAT, but, the court of appeal in Abuja ruled that states should maintain status quo pending the determination of an appeal filed by the Federal Inland Revenue Service (FIRS).
However, SaharaReporters published that a human rights lawyer, Mike Uzekhome, interpreted the status quo in favour of the Rivers State.
Ozekhome had said, “The Court of Appeal, Abuja division, has just ruled that both parties maintained the status quo in an appeal filed by the FIRS against the judgment of the FHC, Port Harcourt, validating the Rivers State law that empowered Rivers State Government to collect VAT, as against the FIRS that had hitherto collected VAT.
“So, the status quo is that it is the Rivers State Government that has the power to collect VAT, until perhaps, the Court of Appeal rules otherwise and set aside the FHC judgment.”
Based on the appeal court’s decision, the Rivers State government took the lingering issue to the Supreme Court for final resolution.
But the minister, Ahmed said the ruling by the court in Rivers State regarding VAT collection was unclear and very regrettable and as result taxpayers had been “confused” about who to pay the tax to.
“The government is facing serious revenue challenges, and therefore this is not the time for litigation but all hands to be on deck to pull through the difficult period,” Ahmed said.
She relied on the court of appeal judgment to maintain that the status quo implied that, “FIRS shall continue to administer VAT in all states of the Federation unless the appellate court rules otherwise.”
“The ruling of the Court of Appeal, therefore, employs all taxpayers in all the states to continue to pay their VAT, and for the FIRS to continue to collect VAT on behalf of the government in compliance with the VAT Act.
“The ruling of the Court of Appeal has provided the much-needed certainty, clarity and consistency that will enable compliance without disruption to business while the final resolution is awaited.”