There are indications that the Organised Private Sector of Nigeria, OPSN, would be heading to court to prevent a scenario where members would be compelled to pay Value Added Tax, VAT, to both federal and state governments, as controversy over which authority collects the tax lingers.
It will be recalled that Rivers and Lagos state governments are currently in court in an effort to wrest control of VAT collection from the Federal Government, with many other states aligning with both states.
Leaders of OPSN, who weekend sought further clarification from the Federal Government on which tax authority should members remit their August VAT, ahead of tomorrow ( 21st of every month) deadline for remittance to avoid sanction, warned that OPSN members cannot afford double VAT as they are already over-burdened by multiple taxations.
The OPSN, comprising the Manufacturers Association of Nigeria, MAN, Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Nigeria Employers Consultative Association, NECA, Nigeria Association of Small Scale Industries, NASSI, and Nigeria Association of Small and Medium Enterprises, NASME, had Friday warned that the uncertainty over the VAT remittance, is very dangerous for businesses.
OPSN members are the major generators of taxes and act as ‘agents’ for VAT collection, as well as play vital roles in keeping the nation’s economy running.
‘Our members must not suffer for this’
A senior member of OPSN who confided in Vanguard, said: “We are adopting multiple approaches to handle the controversy because we do not want our members to be caught napping.
“While we try to reach out to both the federal and state governments to ensure that our members do not suffer or face unnecessary sanction or penalty over the ongoing controversy, we are also looking at legal options.
“In fact, I can confirm to you that we are heading to court next week (this week) to protect our members against the consequences of this controversy. Chief among them is double VAT payment. We are not refusing to pay, but which authority should we pay to?
“What if tomorrow the court says it is the state that has the right to collect VAT and our members had paid to the Federal Government, how do we get a refund? If we say we are not paying pending the determination of the case in the court, the Federal Inland Revenue Service, FIRS, is already threatening sanctions.
“The uncertainty is not good for business at all. So, we will seek legal protection for our members, among others. In other words, we are asking for quick resolution, including political solution by the government.”
Recall that at a joint briefing Friday in Lagos, the OPSN, led by its chairman, and President of NECA, Taiwo Adeniyi, warned that the consequences of the current VAT fight between the Federal Inland Revenue Service, FIRS, and some state governments, portend grave danger for businesses and the nation’s struggling economy.
He said: “We are all aware that the Federal Government, through the Federal Inland Revenue Service, FIRS,— by the Value Added Tax (VAT) Act, 1993 has been the collecting authority for VAT throughout the country.
“This was prior to the case of Attorney-General of Rivers State vs. Federal Inland Revenue Service & Attorney-General of the Federation, where the Federal High Court of Nigeria in Port Harcourt Division, favoured the position of Rivers State Government and paved the way for the state to collect VAT.
“Rivers State has since enacted a Value Added Tax law, which mandates all VAT paying entities within Rivers State to deduct, collect and remit VAT within the state to the Rivers State Government through the Rivers State Inland Revenue Service.
“In a similar trend, Lagos State Government also enacted a VAT law for the state, and there are indications that other states government in the country might also enact VAT laws in their respective states.
“It is also public knowledge that the Appeal Court sitting in Abuja has made further pronouncements to the effect that the status quo be maintained, and Rivers State has appealed against this at the Supreme Court. In all of these, there is heightened uncertainty as to where all of these will end.”
Our worries, by OPS
Continuing, Adeniyi said: “As the umbrella bodies representing the interests of organized businesses in Nigeria, we are seriously concerned at the consequences of the ongoing controversy. While organized businesses have remained law-abiding, fulfilling their tax obligations to both the federal and state governments, it would be an aberration to punish businesses or make them suffer from the proverbial “two elephants fighting.”
“It is, in our opinion, that the conundrum be addressed timely as delay can fester negative effect on businesses, especially in collection and remittance of VAT to the relevant authority.
“We wish to affirm unequivocally that organized businesses are not against the payment of taxes and levies in the country. However, the ongoing situation creates an environment of uncertainty, which will not only affect business competitiveness but also its sustainability.
“We are merely collecting agents in this matter and should not suffer while offering this pro-bono service. It is important to also note that at a time businesses are clamouring for streamlining and reduction of tax burdens, the ongoing challenge has the potential to make businesses pay double-VAT, in view of the demands of the FIRS and state governments for remittance of VAT, more so, as the deadline for remittance of VAT collection falls due on 21st of every month.
“Businesses as the collecting agents, are practically unclear on authority to remit to and without a clear path, this would further aggravate the pain on businesses.
“It is a popular saying that ‘where two elephants fight, it’s the grass that suffers. It is no longer news that Nigerian businesses have been battling with myriads of challenges, making the survival of enterprises and ease of doing business in the country among the worst in this part of the world.
“Adding this current issue to accumulated issues facing Nigerian businesses would make survival of enterprises even tougher. We appreciate the Lagos and Rivers state governments for the platform created to engage organized businesses in the course of this controversy.
“We appeal that the FIRS and the states should also engage in the interest of enterprise competitiveness and national development. We appeal that while the issue remains in the legal quarters, the Federal Inland Revenue Service, FIRS, and states should not throw organized businesses under the bus.”
Amendments sought by FIRS at NASS dead on arrival — Akeredolu
Meanwhile, chairman of the Southern Governors’ Forum, Rotimi Akeredolu, said yesterday that the amendments sought by the Federal Inland Revenue Service, FIRS, at the National Assembly on the controversial Value Added Tax is futile, dead on arrival.
Akeredolu, who said the amendments would be killed at the State Houses of Assembly, spoke on ‘Arise TV Sunday Talk Show’ yesterday.
He said the law does not give power to the Federal Government to collect VAT and share to states, insisting that VAT should be under the state.
The governor said: “That’s the position of the law. The FIRS seeking for amendment is a confirmation that they don’t have the power. The amendment will be dead on arrival. Why seek an amendment to a constitution when the provision is so clear?
“If the Federal Government was to collect VAT for states, it can only get a percentage which the federal government can decide to share at FAAC.
“You can only collect VAT on behalf of the states and hand their money over to them. You can only take a percentage for helping us to collect the money.”
Vanguard
