Ogun may join forces with Lagos, Rivers in VAT collection

Following the audacious moves by Lagos and Rivers states on the collections of the Value Added Tax (VAT) as against collections being made by Federal Inland Revenue Service (FIRS), Ogun State may join forces with Lagos in the collection of VAT.

Recall that Lagos and Rivers states have shown their readiness to commence the collection of Value Added Tax in accordance with the judgement of a Federal High Court in Port Harcourt, ruling that states, and not Federal Inland Revenue Service should be collecting VAT and Personal Income Tax.

Based on this landmark judgement, coupled with the dictates of the recently signed Memorandum of Understanding (MoU) between Lagos and the Ogun States on Joint Development Commission, Ogun state may have no other option, except to join forces with Lagos in the collection of VAT and Personal Income Tax as ruled by the Federal High Court in Port Harcourt.

BusinessDay reports that Lagos has been returning back to Ogun state government’s coffers the Pay-As-You-Earn (PAYE) wrongly remitted to Lagos in accordance with the Residency Rule on Taxation which stipulates that taxes are remitted to the state of residency and not where the taxpayers work.

Read also: More states to join push for VAT collection

In the case of Ogun, many residents of border towns and areas adjoining Lagos, such as Akute, Ojodu, Sango-Ota, Ifo, Arepo, Mowe, Ibafo, Ogijo, Agbara, Igbesa, among others, whose taxes were wrongly remitted to Lagos have been made to be remitted back to Ogun state and the present economic collaboration might also enable Ogun to join forces with Lagos on VAT collection.

Although some senior government officials, especially Dapo Okubadejo, Finance Commissioner and Chief Economic Adviser to Governor Dapo Abiodun contacted in Ogun state as of the time of filing this report could not be reached, an impeccable source told BusinessDay in Abeokuta that government would join forces with Lagos state on political and economic collaboration based on the dictates of Lagos-Ogun Joint Development Commission recently agreed on.

“VAT is very crucial to our economic drive in Ogun state and a Court of Competent Jurisdiction has ruled in favour of states collecting VAT and if you imagine the increasing localisation of investments in our state as the largest industrial hub status as well as huge consumption of our people which can only be second to Lagos, you will also imagine the quantum of money we are losing to the Federation in the name of a joint collection of VAT.

“We are going ahead with Lagos and Rivers on this, and what we are doing now as a government is to look at the merit of the judgement with our legal team headed by the Attorney-General and Commissioner of Judge as well as our economic team chaired by Commissioner for Finance and Chief Economic Adviser, to consider the modalities, it will take, but no going back”, the source said.