FG directs firms to remit VAT to FIRS

Amid controversy and as  the deadline for the remittance of the Value Added Tax (VAT) for August expires today, the Federal Government has directed  companies to pay to the Federal Inland Revenue Service (FIRS), citing   the order by the Court of Appeal for a status quo antebellum.

Attorney-General of the Federation and Minister of Justice Abubakar Malami (SAN) clarified that the status quo referred to the state of affairs before parties went to court, emphasising  that FIRS remained the statutory VAT collecting authority, not states.

The AGF’s spokesman, Dr Umar Gwandu, who stated this while  responding to an enquiry by  The Nation correspondent , said: “As far as the Federal Government is concerned, the status quo ordered to be maintained by the court is a position prior to the submission to the jurisdiction of the court which in effect means the FIRS remains the recognised revenue collector of the VAT in the country.”

The tax-collecting agency also urged companies not to panic or be confused and remit “their returns to the FIRS”.

A highly placed official of the FIRS, who pleaded not to be named, said: “The Appeal Court ruling is in our favour.”

Echoing the AGF, he said the order to “maintain status quo antebellum” supersedes FIRS’ previous statement calling for “the continuation of the status quo”.

The FIRS official warned that “states will be in breach of the Appeal Court ruling if they clamp down on companies that remit their VATs to the FIRS”.

He added: “Any company that is put in such a position has every right to sue the state.

“There are lots of options in that they can sue. You can’t shut down a legitimate business because it does not pay tax to you, that law at the moment does not exist.

“As far as the law is concerned, the status quo that existed before the judgment was made is the existing law. What is that law? That all VAT should be paid to the Federal Government”.

The Nigeria Employers Consultative Association (NECA) directed its members to make their VAT remittances for August to the Federal Inland Revenue Service (FIRS).

NECA is a trade union of employers in the private sector. The association, in a statement by its Director-General, Timothy Olawale, said: “All VAT collected for August 2021 should be remitted to the FIRS based on the Order of the Court of Appeal.”

The Lagos Chamber of Commerce and Industry (LCCI) said businesses were still confused as to who was in charge of VAT.

Its Director-General, Dr Chinyere Almona, in a statement, said the situation was not healthy for the business community and planning.

She believes businesses should not be made to pay VAT twice to different agencies.On Sunday, the Organised Private Sector of Nigeria (OPSN) expressed their worries over how to pay the VAT and to who.

NECA Chairman, Taiwo Adeniyi, urged the Federal Government to clarify the “confusion”.

Rivers State Governor Nyesom Wike, whose administration got a judgment against FIRS, said the VAT battle was an opportunity for states to exercise their constitutional rights.

The governor disagreed with those calling on states to be their brothers’ keeper, saying they should first acknowledge the constitutional right of a state to collect VAT.

Wike spoke when the Managing Director and Editor-in-Chief of The SUN Onuoha Ukeh, led a delegation to present a letter nominating him as The SUN Man of the Year 2020 at Government House, Port Harcourt.

He said: “The issue of VAT did not start from Rivers State. It started in Lagos when the state challenged it at the Supreme Court.

“Unfortunately, the Supreme Court said you (Lagos) shouldn’t have sued the Federal Government. All you would have done was to sue the agency.”

He said Nigeria must encourage federating states to harness their resources and generate revenues, including VAT, to advance development.

Wike said there were attempts to frustrate states like Rivers to actualise the constitutional provisions that empowered them to harness their resources and revenues, particularly VAT.

The governor flayed some public commentators, including some governors, for not considering the legality of states to collect VAT in their analysis and opinions.

To him, they were politicising the matter and looking at it from the prism of ethnicity and religion.

Wike insisted that what the FIRS was doing was illegal and could be likened to robbing the states.

He said: “You don’t even need to be a lawyer to know that VAT is not in items 58 and 59 of the Second Schedule of the 1999 Constitution as amended. Everybody knows that.

“It is not even in the concurrent list. Therefore, it falls under the Residual List. It is not arguable. That yesterday nothing happens does not mean that today nothing will happen, or tomorrow something will not happen.

“Nigeria should encourage states to be strong enough to have resources to develop their states. We are in a federal system where we are practising a unitary system.

“Everybody at the end of the month will run to Abuja to share money. Nobody comes back to the state to think, how do I develop my state.”

The governor said rather than commend Rivers for seeking entrenchment of fiscal federalism and constitutionalism, a particular governor had threatened that the judgment of the court would not stand.

He urged those demanding a brothers’ keeper consideration to first appreciate the position of the law and situate it rightly.

He said: “Some people say, be your brother’s keeper. I have no problem being my brother’s keeper but why not come out and say, let us tell ourselves the simple truth.

“As it is being provided in the law, who is the person responsible to collect the VAT? When you agree to that, that it is the state, then we can sit down to look at the different problems of states; and not to say be your brother’s keeper while you’re doing an illegal thing, in disobeying what the law says you should not do.”

Gombe State Governor Inuwa Yahaya said the move by Lagos and Rivers on VAT was a wake-up call.

Speaking in Gombe when he received stakeholders of the All Progressives Congress (APC) from Gombe South Senatorial district, he said: “If they are granted the opportunity to collect VAT, what are we going to do?”

According to him, if the income from VAT ceases, the state would be unable to pay salaries.He noted that 35 per cent of the state’s earnings were from VAT.

He said the reason the two states could boast over VAT collection was because of the industries they have in their states, hence, “we must wake up to the reality on the ground.’’

Also yesterday, a Northern group, the Arewa Youth Initiative for Peace and Good Leadership, faulted the Southern Governors Forum for endorsing VAT collection by states.

The governors decided at their meeting in Enugu last Thursday to join the VAT collection battle.

The group’s President, Mohammed Katun, said in a statement: “It’s saddening that the southern governors quickly forget that it was Northern region that built the southern region economy that they are bragging about today.

“We must all be our brother’s keepers as a united country for us to progress and develop together because one three can’t make a forest.

“What is Lagos without the rest of Nigeria? The market Lagos is boasting of is dependent on the larger part of the country.

“The Benin Republic has a port; Togo has a port; do they have the population to back up the ports? Without us providing the demand part, what will be Lagos?

“VAT serves them and us. We provide the bulk of the market because without the rest of the states, what is Lagos or Port Harcourt?”

The group urged Southern governors to keep their radical posturing aside and embrace dialogue with their Northern counterparts for a greater and united Nigeria.

The confusion over the VAT collection began with the August 9 judgment of Justice Steven Pam of the Federal High Court in Port-Harcourt, the Rivers State capital, which voided the VAT Act and empowered states to collect VAT.

Following the judgment, Rivers and Lagos states passed laws empowering them to collect VAT. The FIRS appealed the judgment but lost an application for a stay of its execution.

But the Court of Appeal on September 10 ordered parties to maintain status quo antebellum.

Dissatisfied, the Rivers government urged the Supreme Court to set aside the Court of Appeal ruling ordering status quo.

It also urged the apex court to disband the Appeal Court panel and order the constitution of another one to hear the case.

Last Thursday, Rivers and Lagos urged the Court of Appeal to stop FIRS from collecting VAT pending the determination of the issues.

A member of the Lagos State House of Assembly, Setonji David, said that the state would go ahead with the implementation of its VAT Law despite the Appeal Court order.