August 18, (THEWILL) – The Chartered Institute of Taxation of Nigeria (CITN) has reacted to the recent judgment of the Federal High Court, Port Harcourt, declaring as unconstitutional the collection of the Value Added Tax (VAT) by the Federal Government through the Federal Inland Revenue Service (FIRS).
In a judgment delivered by Justice Stephen Pam of the Federal High Court, Port Harcourt Division, Rivers State, it was held that the Rivers State Government, and not the Federal Government, is empowered to collect VAT and Personal Income Tax (PIT) in the State.
The court held that there was no constitutional provision backing the collection of VAT, Withholding Tax, Education Tax and Technology Levy in Rivers State or any other state of the Federation by the FIRS. It declared that the Federal Government is restricted by the Constitution of the Federal Republic of Nigeria, 1999 to taxation of incomes, profits and capital gains.
The Court further declared that the said taxes do not in any way include VAT or any other levy other than those specifically mentioned in Items 58 and 59 of the Exclusive Legislative List of the Constitution.
The CITN said “the Institute is restricting itself to the vexed issue of the constitutionality of the Value Added Tax”, adding that there had been previous court decisions nullifying the VAT Act or parts thereof.
The Institute also cited the case involving the Hotel Owners and Managers Association of Lagos.
“In the Registered Trustees of Hotel Owners and Managers Association of Lagos v. A. G. Federation, the court invalidated some of the provisions of the VAT Act. In Ukala v. FIRS, the court nullified the VAT Act. In A.G. Rivers v. F.I.R.S., it has been reported that the court has nullified the VAT Act and empowered the States to impose, demand and collect VAT within their States.”
“From the foregoing decisions, it is evident that this is not the first time that the VAT Act has been declared unconstitutional.
The body said it was waiting for the appellate courts to take a definite position on the matter before making its comments on the recent judgment.
“As soon as we receive the certified true copy of the judgement, our legal advisers will study it and advise us accordingly. When that is done in the next few weeks, the Institute will take an informed position and the public will be duly communicated.
“We are mindful of our statutory mandate as the only Institute that controls and regulates the tax profession and tax practice in all its ramifications, and we will not shirk our responsibility to the public in all matters relating to taxation in Nigeria,” the statement declared.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
