Consequent to the Value Added Tax (VAT) fiasco, Nigeria Employers’ Consultative Assembly (NECA), has directed its members to remit the VAT generated from the month of August to the coffers of the Federal Inland Revenue Service (FIRS).
This directive was sent to all members of the Assembly via a memo sent from the office of the Director-General of the Assembly, Dr Timothy Adewale.
The memo quoted the Order of the Court of Appeal dated 14th September 2021, where the court ordered that the parties (Lagos and Rivers State) should halt the enforcement of the High Court in Rivers that gave them the power to receive the VAT generated in their states, rather than remitting it into the Federal Government’s pockets.
The court order reads: “That the status quo ante-bellum shall be preserved and/or maintained by the parties pending the hearing and the determination of the pending Motions for stay of execution/injunction and Joinder of the Attorney-General of Lagos State as a Respondent.
“That is to say, the parties SHALL refrain from taking any action to give effect to the Judgment of the Federal High Court in Suit No.: FHC/PH/CS/149/2020: Attorney-General of Rivers State V. Federal Inland Revenue Service & Anor delivered on the 9th day of August 2021 pending the hearing and determination of the applications alluded to above.”
The statement explained that the VAT to be remitted by the taxpayer on 21st September 2021 is the VAT collected for the month of August 2021, while restating that payment of tax is compulsory in Nigeria.
The statement released by the DG of NECA partly reads: “…all VAT collected for the month of August 2021 should be remitted to the FIRS based on the Order of the Court of Appeal. However, as an additional precaution, we encourage member companies to write the FIRS before or immediately after remitting VAT for August 2021 that the VAT remittance is a conditional payment pending the final determination of the VAT case by the superior court.
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“If eventually, the superior court decides that VAT should be collected by States, then the FIRS undertakes to refund the VAT remittance made to the taxpayer, who would thereafter forward it to the appropriate State Inland Revenue Service, failing which the taxpayer would be at liberty to deduct the VAT remittance from future tax liabilities due to the FIRS.
“To proactively manage the uncertainty, we encourage member-companies to compute VAT due to each State Government that has made a VAT law separately, so that if the superior court rules in their favour in future, it would be easier for the companies to ascertain the amount due to each State and remit.”
Arms are folded as Nigerians watch how the issue will play out.
