The battle for Value Added Tax between the Federal Inland Revenue Service and Nigerian states took a major turn this week after a bill on the matter passed a second reading in the Lagos State House of Assembly.
Commenting on the collection of VAT, the Speaker of the Lagos House, Mudashiru Obasa revealed that N500 billion is generated from Lagos State while N300 billion is generated from other southwest states, citing that only a portion is sent back to the states.
PwC in a report has highlighted key recommendations of the Bill which seeks to introduce a law for the imposition and administration of VAT in Lagos State.
The provisions cited in the tax law are:
According to the bill, the Valued Added Tax would be administered by the Lagos State Internal Revenue Service (LIRS), at the rate of 6%
Section 16(2) requires an importer of taxable goods to pay the tax on the goods to the LIRS before clearing the goods (it is not clear how this will be implemented).
Under the State VAT Bill Taxable persons are to register for the tax within 6 months of the commencement of the law or 6 months of commencement of business whichever is earlier. Commencement date is yet to be indicated.
Based on section 9, nonresidents are to register for the tax if they carry on business in the state. There is no provision for self-charging of VAT
Monthly returns and remittance of VAT is due by the 21st of the succeeding month in a manner specified by the LIRS. This means the first return under the law will become due by the 21st of the month after enactment.