Nigeria's FIRS insists on collecting VAT despite new ruling

Nigeria's Federal Inland Revenue Service (FIRS) is urging taxpayers to remain calm and continue paying Value Added Tax (VAT) to the agency, despite recent legal developments. The Federal High Court in Port Harcourt dismissed a motion for stay of execution by the revenue agency, while a bill empowering the Lagos state government to collect VAT has progressed through the state's House of Assembly. Taiwo Oyedele, Partner and West Africa Tax Leader at PwC Nigeria, shared insights on these developments in a recent interview with CNBC Africa. In the interview, Oyedele expressed concerns about the ongoing dispute and its potential impact on businesses and individuals. He highlighted the importance of establishing a clear system of taxation that serves the interests of the people and ensures clarity for taxpayers. Reflecting on the court ruling and potential legal proceedings, Oyedele emphasized the need for a thorough process that includes engagement, enlightenment, and public participation. He cautioned against rushing into legislative changes that could create confusion and uncertainty in the tax system. Regarding Lagos state's efforts to assume control of VAT collection, Oyedele noted the state's significant contribution to VAT revenue. He highlighted the complexities of VAT collection, particularly in a state like Lagos, where multiple national corporations operate and generate VAT revenue. Oyedele also pointed out that a substantial portion of VAT revenue is derived from international trade and services, emphasizing the need for careful consideration in implementing changes to the tax system. As the legal and legislative processes unfold, businesses and taxpayers are facing uncertainty about VAT remittances. Oyedele offered practical advice, suggesting that businesses outside of Rivers state should continue remitting VAT to FIRS until their respective states enact new legislation. For businesses in Rivers state, he advised following the existing VAT laws and awaiting further guidance from the courts. Overall, Oyedele stressed the importance of clarity, stability, and a well-defined tax regime to support business operations and protect the interests of all stakeholders. As the VAT collection dispute continues to unfold, businesses are advised to stay informed, abide by existing laws, and seek professional guidance to navigate the evolving tax landscape.