The historic legal tussle over the taxing powers of states and the Federal Government with respect to Consumption Taxes/VAT has been the subject of various conflicting decisions.
In the recent Ukala v. FIRS. (December 2020) and AG Rivers State v. FIRS & AG Federation (August 2021), the Federal High Court (FHC) in both cases held (among other things) that the constitution does not allow the Federal Government to make tax laws outside the taxation of incomes, profits, and capital gains.
In a related judgement in a case between AG Lagos State v. Eko Hotels & FBIR (2018), the national VAT Act was said to have "covered the field" and thus prevailed over the Sales tax law of Lagos state.
The latest judgment has culminated in the Rivers State Government enacting the state’s Value Added Tax Law No. 4 of 2021 on 19 August 2021. It is left to be seen how the impasse will be resolved, hopefully sooner rather than later.
Find out more in the tax alert below: