A Federal High Court in Port Harcourt ruled that Rivers State should be responsible for receiving Value Added Tax and Personal Income Tax (PIT) in the state, not the Federal Inland Revenue Service.

The Judgement was given by Justice Stephen Dalyop Pam, restricting the FIRS from collecting VAT revenue in the state, according to The Nation.

The report cited that the Judge gave an order of perpetual injunction restraining the Federal Inland Revenue Service and the Attorney-General of the Federation (defendants in the suit) against demanding, threatening and intimidating residents of Rivers State to pay to FIRS, personnel income tax and Value Added Tax.

The ruling added that no constitutional basis exists for FIRS to collect VAT, withholding Tax and Technology Levy from any state in Nigeria as the FG’s tax powers only cover incomes, profits and capital gains.

The ruling is set to be a stepping stone to more financial power for states in Nigeria as experts have argued that VAT generated in certain states should remain in the states not shared federally.

In case you missed it

  • It would be recalled that a few months ago the FIRS and NIPOST settled a 3-year dispute and controversy over who should rightfully collect the stamp duty on behalf of the Federal Government.
  • Nigeria generated a sum of N496.39 billion revenue from Value Added Tax (VAT) in the first quarter of 2021, a surge of 52.93% year-on-year compared to N324.58 billion recorded in the corresponding period of 2020.

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