VAT: Nigeria Employers’ Consultative Association Directs Member-Companies to Remit to FIRS until Appeal is Determined

The Nigeria Employers’ Consultative Association, NECA, has directed its members to remit their value added tax to the Federal Inland Revenue Service, FIRS, not to Lagos or Rivers State government.

In a circular seen by The Loyal Nigerian Lawyer dated 20th September 2021, the Director General, Timothy Olawale said the directive will last until the appellate court delivers verdict on the substantive suit.

Mr. Olawale also advised members to compute VAT in such a distinct form as to allow for seamless remittance in the event that the superior court rules in favour of the states.

Full text of the circular


Your Association has observed with concerns controversies surrounding the collection of Value Added Tax (VAT) in Nigeria, including the judgment of the Federal High Court and most especially the Order of the Court of Appeal of 14th September 2021. The said Order stated:

“That the status quo ante-bellum SHALL be preserved and/or maintained by the parties pending the hearing and the determination of the pending Motions for stay of execution/injunction and Joinder of the Attorney-General of Lagos State as a Respondent. That is to say, the parties SHALL refrain from taking any action to give effect to the Judgment of the Federal High Court in Suit No.: FHC/PH/CS/149/2020: Attorney-General of Rivers State V. Federal Inland Revenue Service & Anor delivered on the 9th day of August, 2021 pending the hearing and determination of the applications alluded to above” (emphasis is mine).

It should be noted that the VAT Law of Rivers State was enacted on 19th August 2021 while that of Lagos State was enacted on 10th September 2021.

The VAT to be remitted by taxpayer on 21st September 2021 is the VAT collected for the month of August 2021. In view of the fact that taxation is statutory – that is to say that there cannot be tax without legislation, there are two (2) laws on VAT in Nigeria as at August 2021 i.e. VAT Act of 1993 administered by the FIRS and VAT Law of Rivers State, administered by the Rivers Internal Revenue Service – which has been stayed by the Order of the Court of Appeal.

Consequently, all VAT collected for the month of August 2021 should be remitted to the FIRS based on the Order of the Court of Appeal.

However, as an additional precaution, we encourage member-companies to write the FIRS before or immediately after remitting VAT for August 2021 that the VAT remittance is a conditional payment pending the final determination of the VAT case by the superior court. If, eventually, the superior court decides that VAT should be collected by States, then the FIRS undertakes to refund the VAT remittance made to the taxpayer, who would thereafter forward it to the appropriate State Inland Revenue Service, failing which the taxpayer would be at liberty to deduct the VAT remittance from future tax liabilities due to the FIRS.

To proactively manage the uncertainty, we encourage member-companies to compute VAT due to each State Government that has made a VAT law separately, so that if the superior court rules in their favour in future, it would be easier for the companies to ascertain the amount due to each State and remit.


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