The Nigerian Organized Private Sector (OPS) has said the consequences of the current VAT ‘war’ between the Federal Inland Revenue Service (FIRS) and some state governments, portends grave danger for the business community and the fragile economic recovery being witnessed in Nigeria if the issue is not resolved amicably.
Rivers State has since enacted a VAT law which mandates all VAT paying entities within Rivers State to deduct collect and remits VAT within the state to the River State government through the River State Inland Revenue Service. In a similar trend, Lagos State government also enacted a VAT law for the state, and there are indications that other state governments might also enact VAT laws in their respective states.
The VAT payment by businesses is due for remittance on September 21.
The OPS which comprise Manufacturers Association of Nigeria (MAN) Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) Nigeria Employers Consultative Association (NECA) Nigeria Association of Small-Scale Industries (NASSI) and Nigeria Association of Small and Medium Enterprises (NASME) argued that if the confusion remains, they may be obliged to go to court for clarity and keep the VAT collected in August until appropriate instruction.
Should the companies get their way, it may have a big impact on the September monthly allocation, which is expected to be given to the 36 states in two weeks.
The concerns for states is even compounded when taken into account that the Nigerian National Petroleum Corporation (NNPC) had earlier announced it will deduct a total sum of N215.32 billion from its remittance to the Federation Account and Allocation Committee (FAAC) in September 2021.
At a joint news conference in Lagos, the OPS, led by their chairman, Taiwo Adeniyi, noted that although the FIRS is relying on the VAT Act, 1993 to collect VAT throughout the country, the judgment in August 2021 delivered by a Federal High Court in Port Harcourt and the subsequent pronouncement by the Appeal Court asking the parties involved to maintain the status quo has put businesses in a state of confusion.
