Confusion as Federal Tax Agency (FIRS) threatens VAT payers who obey new court ruling

Sept. 07 (THEWILL) – The Federal Inland Revenue Service (FIRS) issued a warning regarding the payment of value added tax (VAT), the collection of which, according to the Rivers court ruling last week, fell under the jurisdiction of constitutional responsibility of the states and not of the central government.

Although the court on Monday rejected a subsequent request by FIRS to stay the execution “until the Court of Appeal, or even the Supreme Court, decides the matter”, the agency ordered taxpayers “to continue. to comply with their value added tax (VAT) obligations under the status quo.

Otherwise, according to the FIRS, taxpayers would be on a “collision course with the law”.

The FIRS made the threat in a statement on Monday, September 6, 2021 by the FIRS President’s Special Assistant for Media and Communications, Johannes Wojuola.

Presiding Judge Judge Stephen Dalyop Pam said in his judgment that answering the FIRS prayer would negate the principle of fairness, and noted that as the government and the Rivers State legislature had developed a law concerning the collection of VAT, the courts were bound to obey the laws.

According to the ruling, the law, Rivers State Value Added Tax No. 4 2021, remained valid until overturned by a competent court.

Other states, such as Lagos, in accordance with the court ruling, have started to put in place legislative frameworks for the novelty of the second tier of VAT collection by the government.

In Lagos, the House hastily gave the state’s value added tax (VAT) bill, first and second readings on Monday, and mandated the finance committee to work on it and send it back on Thursday. .

The president urged the executive to ensure it pursues the pending case all the way to the Supreme Court as part of the long-sought quest for fiscal federalism.

The full FIRS statement read: “The FIRS having filed with the Court of Appeal both an appeal against the decision of the Federal High Court sitting in Rivers State in case No. FHC / PH / CS / 149/2020, Attorney General of Rivers State Vs Federal Inland Revenue Service, and an injunction pending to appeal that judgment, assures taxpayers that there is no cause for alarm.

“The Federal High Court’s decision should not create any confusion as to the obligations of taxpayers. Taxpayers must continue to comply with the Value Added Tax Act pending the final decision of the appeal.

“Taxpayers must continue to honor their tax obligations under VAT law. Failure to do so would put them on a collision course with the law, ”the statement said.

“To avoid any ambiguity, the appeal files were sent to the court of appeal. The Service is convinced that, taking into account the existing laws and the arguments and arguments put forward, it will win a favorable judgment in the court of appeal.

However, some commentators have vilified the statement as absurd.

A LadiIshola on the blogging platform, Nairaland, noted: “Whoever issued this press release should be looking for a job by tomorrow morning.

“You haven’t asked for a stay of execution yet, and even if he did, it hasn’t been granted. Why ask people to maintain the status quo? As far as I’m concerned, the status quo in this case is the Federal High Court ruling. Anything outside of that is null and void until the Court of Appeal decides otherwise.

Quoting the Constitution, the walker commented, “They can’t win. Federal VAT is unconstitutional. .. It is very clear: The only taxes which the federal government can impose are: 58. Stamp duties, 59. The taxation of income, profits and capital gains, unless otherwise provided for in this Constitution. VAT is not a stamp duty, a tax on income, profits or capital gains. It’s a consumption tax !!!!

Another commentator by the nickname ‘smallsmall’ wrote: “There is a court ruling in effect saying Rivers can collect VAT, so what nonsense is FIRS saying? Until there is another court ruling that invalidates that ruling and replaces it, everyone in Port Harcourt and other states (by extension) must pay their VAT to their respective state. Citizens are not the judge, their only duty is to pay tax to anyone who is APPROVED by the COURT.

“Imagine, the VAT on beer collected in rivers will be remitted to the State of Sokoto or Zamfara who practice SHARIA and continue to destroy the same beer! “

Esther L. Steinbach