Amid the dispute between the Federal Inland Revenue Service and the Rivers State Government over the collection of Value Added Tax and the order by the Court of Appeal directing the parties to maintain the status quo, the Lagos Chamber of Commerce and Industry has advised businesses to pay their September VAT to the FIRS.
It, however, advised companies to keep records of their VAT payment as proof of proper returns and “in case things turn around.”
The Federal High Court in Port Harcourt had on August 9 declared that the Rivers State Government and not the FIRS should collect VAT and Personal Income Tax in the state.
But the FIRS challenged the decision of the High Court at the Court of Appeal resulting in an order of the appellate court on September 10 directing the parties to maintain the status quo, pending the hearing and determination of the application filed by the Federal Government agency.
Not satisfied with the order, the state government had dragged the FIRS before the Supreme challenging the decision of the Court of Appeal.
The situation has left business organisations in a dilemma with many companies in Lagos and Rivers not sure about who to pay VAT to for September as the month ends this week.
Both Rivers and the Lagos State Government have enacted VAT laws while the latter had asked to be joined as a respondent in the appeal filed by the FIRS at the Court of Appeal.
Amid the legal tussle, the Minister of Finance and National Planning, Zainab Ahmed, was on Saturday reported to have directed taxpayers across the country to continue to pay their VAT to the FIRS “unless the appellate court rules otherwise.”
“The Appeal Court’s ruling, halting the execution of the judgment of the Federal High Court required all parties to maintain the status quo ante bellum. As such, FIRS shall continue to administer VAT in all the states of the federation unless the appellate court rules otherwise.
“The ruling of the Court of Appeal, therefore, implores all taxpayers in all the states to continue to pay their VAT, and for the FIRS to continue to collect VAT on behalf of the government in compliance with the VAT Act,” the minister was quoted in the report as saying.
Efforts to get the position of the Lagos State Government through the Commissioner for Information, Mr Gbenga Omotoso, on the directive given by the minister were unsuccessful.
The Director-General of the LCCI, Dr Chinyere Almona, said, “It will make sense for companies to maintain that status quo by paying to the FIRS and what will say (to them) is try and maintain a proper record of your payment to ensure that you can prove you have made proper returns in case things turn around. If things change, then every company will have a proper record of their filings to prove that they made payment.
“But we can’t say anything other than what the Court of Appeal has said. If the Court of Appeal says everybody should maintain the status quo, that is what they (companies) will have to do. That is what will make sense.”
Similarly, the Independent Petroleum Marketers Association of Nigeria said it would make returns to the Federal Government.
Its National Operations Coordinator, Michael Osatuyi, said “Businesses should maintain the status quo. Since the case has been appealed and is still under review; VAT should be paid to the centre until it is settled by the court.”