FIRS backs northern governors, proposes new bill to strip states of VAT collection powers

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The Federal Inland Revenue Service, FIRS, has approached the National Assembly to move Valued Added Tax and other tax related matters to the exclusive list. 

If successful, the law will grant the federal tax body exclusive rights to collect local consumption taxes in states of the federation, a move which will fulfil the agitation of Katsina State Governor Aminu Masari, Gombe State Governor Inuwa Yahaya and a few others from predominantly northern parts of the country.

In a letter addressed to the Deputy Speaker of the House of Representatives, Idris Wase, the body requested a sponsorship of “A Bill for the establishment of the proposed Federal Revenue Court of Nigeria and the insertion of Value Added Tax under Item 58 of Exclusive Legislative List.”

“The Federal Inland Revenue Service (FIRS) further proposes for the amendment of Section 251(1)(b) of the Constitution of FRN 1999 (Amended) by removing the exclusive jurisdiction of Federal High Court only on anything connected or related to Federal tax matters since same would be vested on the proposed Federal Revenue Court,” the letter said, “The Federal Inland Revenue Service (FIRS) also proposes for the insertion of the Value Added Tax immediately after Stamp Duties under item 58 Part II. 2nd schedule of the 1999 Constitution of the FRN.”

The letter also asks the legislators to include tax disputes, including federal tax laws, companies income tax, petroleum tax, income tax, capital gain tax, stamp duty within the federal collector’s jurisdiction.

This development comes in the wake of tensions between the revenue collection body and state governments.

In August, a Port Harcourt Division of the Federal High Court ruled that states had the legal right to collect VAT and income tax within their jurisdiction and not the FIRS.

FIRS chairman Mohammed Nami had asked companies to ignore the court ruling and appealed the judgement, asking businesses and individuals to continue remitting funds to it.

The Rivers State Government ordered the immediate enforcement of its Value Added Tax Law 2021 across the entire state, following the failure of the FIRS to secure a stay-of-execution order against the state.

Katsina State Governor Aminu Masari had criticised the judgement, saying it was unfair on other parts of the country and could amount to multiple taxation.

Like the FIRS, Mr Masari, a former speaker of the House of Representatives, had promised to block the implementation of the new VAT ruling by the court.

The landmark judgement has, however, set off a chain of events with Lagos State House of Assembly passing the Value Added Tax Bill through its second reading during a plenary on Monday.