… CITN pledges more manpower to boost tax system
Olusola Bello
The Federal Inland Revenue Service (FIRS) has urged taxpayers not to panic over the recent court ruling by the Federal High Court sitting in Port Harcourt which dismissed its motion for stay of execution of the judgment that Rivers State can collect Value Added Taxes from its resident, stating that “until the Court of Appeal, or even the Supreme Court, determines the matter, tax payers are required to continue to comply with their Value Added Tax (VAT) obligations within the status quo framework.”
The FIRS disclosed this in a statement by the Special Assistant to the Chairman of the FIRS on Media and Communications, Johannes Wojuola.
“The FIRS having lodged, in the Court of Appeal, both an appeal against the decision of the Federal High Court sitting in Rivers State in Suit No. FHC/PH/CS/149/2020, Attorney General of Rivers State Vs Federal Inland Revenue Service, and an injunction pending appeal of the said judgement, assures taxpayers that there was no cause for alarm.
“The Federal High Court ruling should not breed any confusion as to the obligations of taxpayers. Taxpayers must continue to comply with the Value Added Tax Act pending the final determination of appeal.
“Taxpayers must continue to honour their tax obligations under the VAT Act. Failure to do this would put them on collision course with the law”, the statement said.
“For the avoidance of doubt, records of appeal have been transmitted to the appellate court. The Service is confident that, given the extant laws, the arguments and case put forward, it will earn a favoured judgment at the appellate court”, the statement concluded.
However Rivers State Governor, Nyesom Wike, on the other hand, has ordered the Rivers State Revenue Service (RSRS) to fully implement the State Value-Added Tax Law 2021 which he assented to recently.
This follows the failure of the Federal Inland Revenue Service (FIRS) to stop the state government from collecting VAT, having filed an application at a Federal High Court in Port Harcourt, the state capital.
“With today (Monday’s) judgement, the way is now clear for the administration and enforcement of the Rivers State Value-Added Tax Law 2021 across the entire state until otherwise decided and set aside by the superior courts,” the governor said in a statewide broadcast on Monday, hours after the court refused the suit by FIRS.
“Consequently, I hereby direct the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities, and individuals with immediate effect.
“Let me warn that the Rivers State government is fully in charge of the state and will not tolerate any further attempt by the FIRS to sabotage or undermine our authority to freely administer our tax and other related laws in our own state. Those who play with fire risk having their fingers burnt; enough of the shenanigans.”
Governor Wike also directed all corporate bodies, business entities, and individuals in Rivers to willingly, truthfully and promptly comply with their tax obligations under the law.
He warned that those who fail in such responsibilities risk sanctions, including having their business premises sealed up by the government.
The governor assured residents that his administration would effectively use the expected proceeds from the collected tax to accelerate the development of the state and improve their well being.
He explained that the enactment of the VAT law followed a recent judgement of the court that upheld the constitutional right and authority of state governments to impose, collect, and utilise VAT within their respective territorial jurisdictions.
“As expected, the Federal Government, through the Federal Inland Revenue Service (FIRS), disagreed and filed an appeal coupled with a request for stay-of-execution of the judgment before the Federal High Court.
“While the appeal was pending and without any stay-of-execution of the subsisting judgement, the FIRS went about to bully corporate bodies and business entities from paying the VAT to the Rivers State government, even when they knew that an appeal does not serve as a stay, neither was there anything to stay in a declaratory judgement,” Governor Wike said.
“As a mere agency of the Federal Government without any political authority, the effrontery and impunity exhibited by the FIRS against the Rivers State government were ill-advised and highly provocative.”
He stated that the government had decided to suspend the enforcement of the VAT Law pending the outcome of the FIRS’s application for stay-of-execution.
According to the governor, the state did no wrong in exercising its legal right under a constitutional democracy to stop the continuing breach, denial, and curtailment of the constitutional right of states to lawfully impose and collect value-added and other related taxes within their jurisdiction.
He said the objective of such action was to contribute to the advancement of fiscal federalism by enabling the federating states to explore their potential and capacity for generating greater internal revenues.
Governor Wike, however, admitted that some states with presently low economic activities and ethically restrictive social policies with economic implications may be adversely affected for now.
“Above all, fiscal federalism remains the right path to economic self-reliance and sustainability for all our states and the benefits derivable from this case by all the states in the long run far outweigh the immediate revenue loss that some states may presently suffer,” he said.
Prior to the governor’s broadcast, Justice Stephen Dalyop Pam refused the application by FIRS, seeking to stop the Rivers State government from collecting VAT.
He held that the revenue agency failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly and signed by Governor Wike on August 19, therefore, the state law on VAT was valid and subsisting.
As the Federal Inland Revenue Service (FIRS) vowed to continue collecting Value Added Tax (VAT) across the country pending the determination of its appeal against the court judgement that bars it from doing so, the Chartered Institute of Taxation of Nigeria (CITN) said the analysis of the Certified True Copy (CTC) of the judgement and advice from its legal team would determine its stand on the issue.
“When that is done in the next few weeks, the Institute will take an informed position and the public will be duly communicated”, says its Rgistrar/CEO, Adefisayo Awogbade, in a statement made available to Daily Sun. “We are mindful of our statutory mandate as a tax regulatory professional Institute and we will not shirk our responsibility to the public in all matters relating to taxation in Nigeria,” the statement adds.
In a judgment delivered by Justice Stephen Pam of the Federal High Court, Port Harcourt Division, Rivers State, recently, it was held that the Rivers State government, and not the Federal Government, is empowered to collect Value Added Tax (VAT) and Personal Income Tax (PIT) in the state.
The court held that there was no constitutional provision backing the collection of VAT, Withholding Tax, Education Tax and Technology Levy in Rivers State or any other state of the federation by FIRS, owing to the fact that the Federal Government is restricted by the Constitution of the Federal Republic of Nigeria, 1999 to taxation of incomes, profits and capital gains and these do not in any way include VAT or any other levy other than those specifically mentioned in Items 58 and 59 of the Exclusive Legislative List of the Constitution.
Citing previous decisions nullifying VAT Act or parts of it, Registered Trustees of Hotel Owners and Managers Association of Lagos v. A. G. Federation Others In October 2019 and Emmanuel Chukwuka Ukala v. FIRS & A.G. FEDERATION in Suit No.FHC/PH/CS/30/2020, the tax body noted:
“While the Institute is in possession of the first and second cases mentioned, we are making efforts to get a Certified True Copy of the third and current case. From the foregoing decisions, it is evident that this is not the first time that the VAT Act has been declared unconstitutional.
“As an Institute, we were waiting for the appellate courts to take a definite position on the matter before making our comments. In view of the length of time that it takes for an appeal to be determined in our country, we think it will be in the public interest not to wait any longer. As soon as we receive the certified true copy of the judgement, our legal advisers will study it and advise us accordingly.”
