7 things to know about Rivers VAT Law 2021

Rivers State has recently begun a rally to stop the Federal Inland Revenue Service (FIRS) from collecting Value Added Tax generated by states.

VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 per cent.

According to Governor Nyesom Wike, Rivers generates an average of N15bn in VAT every month but gets a paltry 25% from the Federal Government as a monthly allocation.

Last month, the Federal High Court sitting in Port Harcourt, in a judgment in suit number FHC/PH/CS/149/2020, held that the Rivers State Government had the powers to collect VAT within its territory.

Justice Stephen Pam rejected a stay of execution application by the FIRS, and the inland revenue service then wrote to the National Assembly to seek the inclusion of VAT collection in the exclusive legislative list.

On Wednesday, at a stakeholders’ meeting, Wike ordered companies in the state to start remitting VAT directly to the state government from September 2021.

READ ALSO: Lagos Assembly passes VAT, open grazing bills

Wike had assented to the Rivers State Value Added Tax Law 2021 in August after it was passed by the state House of Assembly.

Here are things you should know about the 15-page document

1. Section 7 of the law specified that the Rivers State Board of Internal Revenue shall administer and implement the law including the collection of VAT from all taxable persons and companies.

2. Section 8 of the law stated that taxable persons or business entities must register with the Board within six months of the commencement of the law or earlier. Failure to do so attracts a N50,000 fine for the first month and a N100,000 fine for subsequent months.

3. Section 9 of the law noted that non-resident companies transacting businesses in the state are also required to pay 7.5% VAT on taxable goods and services to the Board.

4. Section 15 of the law stated that taxable persons or companies are required to render an account to the Board on or before the 21st day of the succeeding month of the goods and services purchased or supplied in the previous month.

5. Section 22 of the law specified that evasion of tax attracts not more than three years imprisonment or twice the amount of tax evaded

6. Section 35 clearly stated that the state government will get 70% of the total revenue that accrues from VAT while the local government where the transactions were performed will get 30%.

7. The law exempted VAT collection on goods and services including medical and pharmaceutical products, food items, books and educational materials, baby products, fertilizers and farming equipment, amongst others.

(List compiled by The PUNCH)

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