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FAAC Reflates Economy With N697bn Amid Raging VAT Controversy

FAAC Reflates Economy With N697bn Amid Raging VAT Controversy

 

 

 

 

 

 

Amid the raging controversy on the Value Added Tax (VAT) the Federation Accounts Allocation Committee (FAAC) has released to the three tiers of government, a total of N696.965 billion to reflate the economy.

The amount which serves as the August allocation to the tiers was shared amid the persisting order of status quo ante-bellum by the Appeal Court to state governments that had enacted tax law and the Federal Inland Revenue Service (FIRS).

It would be recalled that a Federal High Court in Port Harcourt had in an August 10 judgment barred the FIRS from collecting VAT and personal income tax in Rivers State.

Justice Stephen Dalyop Pam, in his ruling, noted that the “Rivers state government through the State Assembly has duly enacted Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT.

The judge noted that every court in the country is constitutionally mandated to obey every legislation enacted by both the National and State Assembly, explaining that the Rivers state government law on VAT remains valid until set aside by a court of competent jurisdiction.

Weeks later in September, Lagos state also enacted a Tax law that empowers it to also, like Rivers state, collects and retains VAT which is also known as luxury tax

On September 14th, however, the Court of Appeal in Abuja ordered both the Rivers and Lagos state governments to stay action in their effort to commence the collection of the Value Added Tax (VAT) pending the resolution of the legal dispute on the matter.

Haruna Tsanami, the lead judge of the panel, also suspended the operation of the law passed by the Rivers State House of Assembly and assented to by Governor Nyesom Wike, for the collection of VAT by the State government.

However, the N606.965 billion August allocation to the federating units covered Gross Statutory Revenue of N477.504 billion, Value Added Tax (VAT) of N166.228 billion, Exchange Gain of N2.830 billion, Excess Bank Charges N0.403 billion and N50 billion from Non-Oil revenue.Oshundun Olajide, Deputy Director (Information), Finance

Ministry stated that, from the total amount, the Federal Government received N289.257 billion, the States received N217.183 billion, the Local Government councils got N161.541 billion while the oil-producing states received N41.376 billion as derivation (13% of Mineral Revenue).

FAAC, according to Oshundun stated that at the end of the meeting, the total revenue from VAT for August 2021 was N166.228 billion from which the federal government got N24.934 billion, the States received N83.114 billion, Local Government Councils got N58.180 billion.

Furthermore, the sum of N50 billion from Non-Oil revenue was equally distributed accordingly and the Federal Government received N26.340 billion; the States got N13.360 while the LGCs received N10.300 billion.

From the statutory revenue of N477.504 billion was received for the month from which the Federal government received N236.437 billion, States got N119.924 billion, LGCs got N92.4456 billion, and Derivation (13% Mineral Revenue) got N28.687 billion.

Reports from FAAC also revealed that Companies Income Tax (CIT), Petroleum Profit Tax (PPT), Oil and Gas Royalties and Excise Duty recorded decreases, while Import Duty and Value Added Tax (VAT) increased significantly.

GTWorld

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