The Federal Inland Revenue Service (FIRS) on Wednesday declared that no sub-national government can collect Value Added Tax (VAT).
To this end, the Federal Government’s tax agency insists it remains the only statutory empowered tax agency of the government allowed to collect VAT on behalf of the three tiers of government.
FIRS’ Group Lead, Special Operations Group, Mr. Mathew Gbonjubola stated this position during a chat with journalists on Wednesday in Abuja. He attended the media chat with the Group Lead, Digital and Innovation Support Group, FIRS, Mrs Chiaka Ben-Obi.
A Federal High Court sitting in Port Harcourt, Rivers State, had dismissed an application by the Federal Inland Revenue Service, (FIRS) seeking to stop the state government from commencing collection of VAT, in the state.
The ruling came on a day the Lagos State House of Assembly read for the first and second time, the state’s VAT bill and asked its Committee on Finance which is handling it, to report back on Thursday.
On the thrust of the High Court ruling, Governor Nyesom Wike directed the Rivers State Revenue Service to immediately commence collection of VAT from corporate bodies and businesses in the state.
Also on Wednesday, Governor Wike insisted that beginning from this September, businesses in Rivers State must begin to pay VAT to the state government in line with the court pronouncement.
But, speaking to the media Wednesday, FIRS Group Lead, Special Operations Group, Mr. Mathew Gbonjubola said VAT is administered on behalf of the federation and not on behalf of the Federal Government.
“By that I mean VAT is administered on behalf of the three tiers of the government we have in Nigeria. The 774 local governments, the 36 states and the FCT and the Federal Government of Nigeria. The revenue arising from VAT is shared amongst the three tiers of government based on the provisions of the law. Currently 35% goes to the local government, 50% goes to the state government while 15% goes to the Federal Government. So in actual effect, the 85% of VAT collected goes to state and local governments while only 15% goes to the federal government. The VAT revenue is not paid into the federation account at inception; it goes into a VAT pool account. It is only after the sharing and allocation that the portion that falls to the Federal Government goes to the relevant designated revenue pool account,” he added.
He said unlike other forms of taxes that are straight and easy to administer, VAT he added is a combination of input and output.