Nigeria: VAT legislation introduced (Lagos State)

Provisions of the VAT legislation presented by the Lagos State government

Provisions of the VAT legislation presented by the Lagos State government

The Lagos State government on 8 September 2021 presented a state value added tax (VAT) bill at a stakeholders meeting organized by the House of Assembly through its Committee on Finance. 

The presentation of the bill follows the failure of the Federal Inland Revenue Service (FIRS) to obtain a stay-of-execution on the decision of the Federal High Court (FHC) that the government lacked the power to impose and collect taxes not listed under Items 58 and 59 of Part I of the constitution. Read TaxNewsFlash

Provisions in the legislation include the following.

  • VAT would be charged at the rate of 6% on taxable supplies of goods and services, other than those expressly exempted or designated as zero-rated in the schedules to the bill.
  • The Lagos State Internal Revenue Service (LIRS) would be responsible for administration and implementation of the bill.
  • Companies resident in Lagos State would be required to register with LIRS for VAT within six months of commencement of the bill, or six months from commencement of business, whichever is earlier.
  • Monthly VAT returns and remittances would be due by the 21st day of each month following the month of the transaction.
  • Failure to submit VAT returns to the LIRS would incur a penalty of ₦500,000 for each month of default.
  • Failure to remit VAT would incur a penalty of 5% per annum plus interest at the commercial rate of the amount of tax remittable, in addition to the outstanding tax.
  • 75% of the collections would be allocated to state government while 25% would be distributed to local governments based on the derivation principle. 
  • Establishment of a VAT Appeal Tribunal would resolve disputes arising from additional tax assessment set out under the provisions of the bill.

The House of Assembly is currently soliciting memoranda on the bill from stakeholders before it is finalised for passage and assent by the governor.
 

Read a September 2021 report [PDF 228 KB] prepared by the KPMG member firm in Nigeria

 

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