VAT: Plateau, Adamawa, Kaduna join forces with with FIRS, battle Lagos, Rivers

Three States of Adamawa, Plateau and Kaduna states are set to join the Federal Inland Revenue Service (FIRS) in its appeal against the judgment of the Federal High Court in Port Harcourt.

Earlier, the court had in its judgment empowered Rivers state as the rightful collector of the tax among others.

Meanwhile, the FIRS has challenged the judgment at the Court of Appeal seeking the setting aside of the high court verdict.

But a dependable source told Blueprint in Abuja that the AGF and governors of Adamawa, Plateau and Kaduna states would be filing a leave of the court to be joined in the suit on Tuesday.

Although, the AGF is already a defendant in the appeal, the source hinted that the Federal Ministry of Justice under the AGF has opted to be part of the appellant in the matter so as to enable it argue effectively in support of the FIRS.

“They are going to seek to be joined in the suit as co-appellants against the federal high court’s judgment that favours Rivers state.

“These states understand the possible consequences if the final judgment at the Supreme Court goes against the FIRS.They are going to take the fight as if it is theirs,” the source stated.

“In fact, their motion papers would be ready by October 4 and will be filed on Tuesday October 5. I can confirm that one to you.”

The source also added that more states especially Kogi and Zamfara are going to be joining the suit to form a coalition with the FIRS.

When contacted for clarrifications over the developments, Dr Jibrilla Umar Gwandu, Senior Special Assistant to AGF Abubakar Malami SAN could not be reached as at the time of filing this report.

Blueprint reports that decision of the three states is coming on the heels of the communique released by the Northern State Governors’ Forum last week where they expressed dissent and disagreement with the VAT laws of Lagos and Rivers state.

Plateau State Governor, Simon Lalong had offered this while reading the communique of the meeting of the Governors.

Tax experts have also argued that were states to collect their VAT, there is likely going to be a chaotic VAT regime of possible instances of double taxation, over-taxing, poor efficiency of collection, deterioration of the ease of doing business gains, among others.

In a paper titled “How To Fix Nigeria’s Broken VAT System”, one Taiwo Oyedele who claimed to be a leading tax expert in West Africa, and the Fiscal Policy Partner and Africa Tax Leader at PwC, wrote: “If states enact their VAT or Sales tax laws, the guaranteed winners will be the federal government in respect of import VAT and international transactions (whether retained by FG only or paid into the Federation account and shared), and the FCT.

“States that may either lose or gain are Lagos and Rivers due to Headquarters effect and subject to collection efficiency.

“Lagos also has to deal with granting input VAT at 7.5% on items sourced by businesses outside the state against the lower output VAT rate of 6%. All other states and 774 local governments will be worse-off, all things being equal.”