FIRS may forfeit N2.4tn revenue to states over VAT crisis

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Factual Pursuit of Truth for Progress

By Francis Ogwo

About N2.4trn may be lost by the Federal Inland Revenue Service to the 36 state governments in 2022 if it loses its appeal against a Federal High Court verdict barring it from collecting the Value Added Tax and Personal Income Tax.

Reports say the N2.4tn is what the FIRS projects to collect from the VAT if retains the authority to collect consumption based tax.

On August 10, the FHC sitting in Port Harcourt, the Rivers State capital, had ruled that states and not the FIRS have the legal rights to collect VAT and income tax. This judgment was appealed by the FIRS.

Meanwhile, the governments of Lagos and Rivers states have expressed their readiness to begin the collection of Value Added Tax in accordance with the judgment.

The Rivers State Governor, Nyesom Wike, had signed into law the bill that empowers the state to collect VAT, while the Lagos State Government said it had already notified all the stakeholders involved in the payment and receipt of VAT of its resolve to enforce the judgment to the letter.

These is in spite of the opposition by the FIRS, which already filed an appeal against the judgment. Some northern states say they prefer the Federal Government to continue collecting the tax.

The Joint Senate Committees working on the 2022 – 2024 Medium Term Expenditure and Fiscal Strategy, on Friday expressed concerns over the development but the Chairman of the FIRS, Muhammad Nami, allayed the fears of the joint panels.

The Chairman of the Senate Committee on Finance who chaired the joint MTEF panels, Senator Solomon Adeola, specifically asked Nami while he didn’t speak on the court judgment and the revenue generating agency boss replied that the case had been appealed.

Nami said, “I did not deliberately mention the issue because doing so would be subjudice since it is already pending before the Court of Appeal.”

The FIRS boss however proceeded to present his agency’s revenue projection for 2022, 2023 and 2024 fiscal years.

A document he submitted to the joint panels which was exclusively obtained by our correspondent indicated that the agency projected to raise N2.44tn from both import and non-import VAT in 2022

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