VAT: Wike floors FG as Court dismisses FIRS application

A Federal High Court sitting in Port Harcourt, Rivers State, has dismissed an application by the Federal Inland Revenue Service (FIRS), seeking to stop the Rivers State Government from collecting Value Added Tax (VAT).

This follows the application filed by the FIRS in mid-August against the judgement of the same court which had on August 9, ruled that the Rivers State Government and not the FIRS should collect VAT and Personal Income Tax in Rivers State.

While delivering his judgement on the application by the FIRS on Monday, Justice Stephen Dalyop Pam says FIRS failed to file an application to set aside the Rivers State Tax Law of 2021 which was recently enacted by the Rivers State House of Assembly and signed into law by Governor Nyesom Wike on August 19, therefore the state law on VAT is valid and subsisting.

The judge ruled that it may be a difficult task for the Federal Government to refund the state if his judgment authorizing the state to collect the tax is upheld at the appellate courts, being that the Federal Government already has a huge liability arising from the many years it has collected the tax on behalf of Rivers State.

The judge agrees that whatever amount Rivers State may have collected within the litigation period can easily be remitted to the FG if the state loses at the Appeal Court.
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It would be recalled that while delivering his ruling on August 9, Justice Stephen Dalyop Pam, also issued an order of perpetual injunction restraining FIRS and the Attorney General of the Federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, personnel income tax and VAT.

The judgment was delivered in a suit filed by the Attorney General of Rivers State against the Federal Inland Revenue Service and the Attorney General of the Federation.

The FIRS has, however, appealed the judgement by the Federal High Court in Port Harcourt, asking for a stay of execution pending the determination of the appeal, while also asking taxpayers to continue to meet their tax obligations including VAT with the Federal Government.