A federal high court sitting in Lagos has affirmed the power of the Federal Inland Revenue Service (FIRS) to collect value-added tax (VAT) on transport and food services provided by independent drivers and vendors operating via platforms like Bolt.
In a judgment delivered by Akintayo Aluko, the presiding judge, the court upheld an earlier ruling of the tax appeal tribunal (TAT), which recognised FIRS’ authority to appoint such digital platforms as VAT collection agents.
The judge also awarded N1 million in costs against the Bolt operators who filed the appeal.
The dispute reportedly began in 2022 when the operators filed suit No. TAT/LZ/VAT/074/2022 at the TAT, asking the tribunal to restrain the FIRS from imposing the VAT on services rendered through the Bolt platform.
They argued that the tax agency’s move violated Section 10 of the VAT Act, adding that Bolt, as a non-resident digital intermediary, should not be classified as a supplier.
However, the tribunal dismissed the case in May 2023, prompting the operators to challenge the decision at the Lagos federal high court.
Their legal team, led by Elvis Asia, argued that the FIRS exceeded its powers by appointing them as tax agents without satisfying the requirements under subsections (1) and (2) of Section 10.
They also claimed that the agency’s simplification guidelines wrongly categorised Bolt as a taxable supplier, despite the company not directly providing transportation or food services.
However, Moses Idaho, counsel to FIRS, asked the court to dismiss the appeal, describing the claims as speculative and a misinterpretation of the law.
In his ruling, Aluko resolved most of the issues in favour of the tax body.
He said the tax authority acted within the law when it appointed the platform as a collection agent under Section 10(3) of the VAT Act.
“There is no valid reason to disturb the judgment of the Tribunal,” the judge said.
“Consequently, the judgment of the Tribunal delivered on 26th May 2023 is affirmed.”
The judge also said the appeal failed and “it is accordingly dismissed”.
“The cost of the action assessed in the sum of N1,000,000 only is awarded in favour of the Respondent against the appellant,” he added.
In 2019, the FIRS said it would begin to imposeVAT on online transactions, both domestic and international, effective from January 2020. (The Cable)
