Amid the dispute between the Federal Inland Revenue Service and the Rivers State Government over the collection of Value Added Tax and the order by the Court of Appeal directing the parties to maintain the status quo, the Lagos Chamber of Commerce and Industry has advised businesses to pay their September VAT to the FIRS.
It, however, advised companies to keep records of their VAT payment as proof of proper returns and “in case things turn around”.
The Federal High Court in Port Harcourt had on August 9 declared that the Rivers State Government and not the FIRS should collect VAT and Personal Income Tax in the state.
But the FIRS challenged the decision of the High Court at the Court of Appeal resulting in an order of the appellate court on September 10 directing the parties to maintain the status quo, pending the hearing and determination of the application filed by the Federal Government agency.
Not satisfied with the order, the state government had dragged the FIRS before the Supreme challenging the decision of the Court of Appeal.
The situation has left business organisations in a dilemma with many companies in Lagos and Rivers not sure about who to pay VAT to for September as the month ends this week.
Both Rivers and the Lagos State Government have enacted VAT laws while the latter had asked to be joined as a respondent in the appeal filed by the FIRS at the Court of Appeal.
Amid the legal tussle, the Minister of Finance and National Planning, Zainab Ahmed, was on Saturday reported to have directed taxpayers across the country to continue to pay their VAT to the FIRS “unless the appellate court rules otherwise”.
“The Appeal Court’s ruling, halting the execution of the judgment of the Federal High Court required all parties to maintain the status quo ante bellum. As such, FIRS shall continue to administer VAT in all the states of the federation unless the appellate court rules otherwise.
“The ruling of the Court of Appeal, therefore, implores all taxpayers in all the states to continue to pay their VAT, and for the FIRS to continue to collect VAT on behalf of the government in compliance with the VAT Act,” the minister was quoted in the report (not Sunday PUNCH) as saying.
Efforts to get the position of the Lagos State Government through the Commissioner for Information, Mr Gbenga Omotoso, on the directive given by the minister were unsuccessful.
But speaking with Sunday PUNCH, the Director-General of the LCCI, Dr Chinyere Almona, said, “It will make sense for companies to maintain that status quo by paying to the FIRS and what will say (to them) is try and maintain a proper record of your payment to ensure that you can prove you have made proper returns in case things turn around. If things change, then every company will have a proper record of their filings to prove that they made payment.
“But we can’t say anything other than what the Court of Appeal has said. If the Court of Appeal says everybody should maintain the status quo, that is what they (companies) will have to do. That is what will make sense.”
Similarly, the Independent Petroleum Marketers Association of Nigeria said it would make returns to the Federal Government.
Its National Operations Coordinator, Michael Osatuyi, said “Businesses should maintain the status quo. Since the case has been appealed and is still under review; VAT should be paid to the centre until it is settled by the court.”
When contacted, the Director-General of the Nigerian Chamber of Commerce and Industry, Amb Ayo Olukanni, referred one of our correspondents to a statement signed by the President of the Nigeria Employers’ Consultative Association and Chairman of the Organised Private Sector of Nigeria, Mr Taiwo Adeniyi, on the VAT dispute.
The statement titled, ‘Address by the Presidents of the Organised Private Sector of Nigeria on the on-going uncertainties generated by the Value-Added Tax Administration: OPSN Calls for caution and Urgent Action,” and made available to Sunday PUNCH on Saturday read in part, “Businesses as the collecting agents, are practically unclear on authority to remit to and without a clear path, this would further aggravate the pain on businesses.
“Thus, we call on the President of the Court of Appeal to ensure an accelerated hearing and speedy completion of the appeal before the court, within the shortest possible time, to ease the burden of uncertainty that the current VAT situation has placed on businesses.”
Meanwhile, members of the business community in Rivers State have reiterated their support for the Rivers State Government on the row in the collection of VAT.
The President, Rivers Entrepreneurs and Investors’ Forum, Ibifuro Bobmanue, said because there was a pending appeal by the Federal Government on the issue, it was important for the process to be exhausted.
“They (businesses) should pay the VAT to the Rivers State Internal Revenue Service’. Ordinarily, that is what it should be. For now, businesses are expected to be careful not to involve themselves in any form of VAT-related payment. It is a quagmire that we, as businesses, need clarity from the Supreme Court to be able to once and for all decide on this issue.”