As the Federal Inland Revenue Service (FIRS) and the Rivers State Governor, Nyesom Wike, bicker over rights to collect Value Added Tax, the former has made moves to legally own the right.

The FIRS, in a letter to the National Assembly, asked the legislature to include collection of VAT in the exclusive legislative list.

The letter, dated June 1, also seeks the parliament’s approval of the establishment of the Federal Revenue Court of Nigeria.

This comes amidst moves by the Rivers State Government to stop the federal government from collecting VAT from the state.

Background

The FIRS has been in charge of VAT collection, which is then shared among the federal, state and local governments.

Rivers, Lagos and four other states are responsible for about 80 per cent of VAT collected in Nigeria.

A federal high court in Port Harcourt on August 10, ruled that it was the right of the Rivers government to receive VAT in the state – restraining the FIRS from collecting VAT and personal income tax in Rivers State.

The state had argued that it was against the constitution to generate VAT that is later shared to other states.

The FIRS also failed to obtain a stay of execution it sought to prevent the state government from enforcing the verdict. This is even as the agency appealed the ruling.

By this judgement, the Rivers State is cleared to enforce its newly passed VAT Act for now.

A similar bill just scaled second reading at the Lagos State assembly on Monday.

The letter

In a bid to override the Rivers State Government, the FIRS wrote to the Deputy Speaker of the House of Representatives, Idris Wase, to vest, exclusively, all adjudication of tax disputes, including federal tax laws, companies income tax, petroleum tax, income tax, capital gain tax, stamp duty, VAT, taxes, levies and other laws, regulations, proclamations, government notices and rules on it.

Mr Wase is the Chairman of the House Ad-hoc Committee on Constitution Review.

The letter is titled, ‘Request for sponsorship of a bill for the establishment of the proposed Federal Revenue Court of Nigeria and the insertion of Value Added Tax under item 58 of the exclusive legislative list’.

In the communication, the agency sought the amendment of Section 251 (1) (b) of the Constitution of the FRN 1999 (amended) to remove the exclusive jurisdiction of the Federal High Court only on anything connected or related to federal tax matters since the same would be vested on the proposed federal revenue court.

“The Federal Inland Revenue Service also proposes for the insertion of value added tax immediately after Stamp Duties under item 58 part II of 2nd schedule of the 1999 Constitution of the FRN.

“The Federal Inland Revenue Service appreciates the maximum cooperation and support we are receiving from your good office on tax matters generally. This has boosted our morale and determination to do more for the government in tax revenue generation.

“The FIRS therefore wishes to further request that the House of Representatives consider the request for the establishment of the Federal Revenue Court,” part of the letter read.

The FIRS also noted that Item 59 of the Exclusive Legislative List Part 1, 2nd Schedule to the Constitution of the FRN 1999 as amended vests the powers to make laws on anything related to tax matters in Nigeria, on the National Assembly.

While the agency stated that the Federal Revenue Court was established by the promulgation of the Federal Revenue Court Decree No.13 1973 and later renamed to Federal High Court, it said the amended Section 7 of the Federal High Court Act (1991), conferred exclusive jurisdiction on the Federal High Court in relation to tax matters amongst others.

“Section 228(1) and 230(1) was further re-enacted as Section 251(1) (a) to (s), of the Constitution of FRN 1999.

“The FIRS hereby proposes for the insertion of Section 254(G) to 254 (L) in the 1999 Constitution of the FRN to provide for the establishment of Federal Revenue Court, the appointment of Chief Judge, power to make rules for the proceedings, the appointment of judges of FRC and the exclusive jurisdiction of FRC on federal tax matters.”

FIRS denies

But in a turn of events, the FIRS has feigned ignorance over the letter or its attempt to include collection of VAT in the exclusive legislative list.

The Group Lead, Special Tax Operation Group of the FIRS, Matthew Gbonjubola, in a press briefing on Wednesday, said the FIRS was unaware of the existence of such bill as it was not being sponsored by the organisation, ICIR reports.

“I am not aware that FIRS has presented any bill to the National Assembly to request for any social media tax and I can tell you, on behalf of my Executive Chairman, very clearly that this is not from us. So, if there is any such bill at the National Assembly, the FIRS is not the sponsor and we have not seen it,” he said.

Wike talks tough

Governor Nyesom Wike of Rivers State on his part, has vowed not to relent in the “fight.”

The governor on Wednesday, insisted that the state will go ahead to enforce the provisions of the VAT Act.

While he insisted that “Rivers money is not meant for Abuja people but for the development of his state”, he threatened to shut down FIRS offices in the state should the “bullying” continue.

He made this statement at a meeting of concerned parties on Wednesday, in Port Harcourt while addressing Shell Petroleum Development Company and other representatives of oil companies and business owners in the state.

The event was televised live on Channels TV.

Mr Wike called for an end to what he described as the injustice in the country.

“Rivers State generated N15bn in June 2021 but got N4.7bn while Kano produced N2.8bn in June but Kano also got N2.8bn. Sometimes you don’t want to believe these things exist.

“…I cannot continue to beg the federal government for what belongs to his state.

“People say that let heaven not fall but sometimes I believe that heaven should come down so that everybody will rest…When we do the right thing, heaven is at peace. So, the right thing must be done at all times,” he said.

It is not clear whether the National Assembly will oblige the request of the FIRS as the lawmakers are currently on recess and expected to resume plenary next Tuesday.

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