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Value Added Tax war: A legal appraisal of consumption tax collection and retention in Nigeria

K.J. Bielu


The Supreme Court of Nigeria on the 12th day of April, 1986 in Attorney-General, Ogun State v Alhaja Ayinke Aberuagba & 7ors2 declared that the words “in particular” used in item 61 of the Exclusive Legislative list of the Constitution of the Federal Republic of Nigeria, 1979 to be words of limitation and not of emphasis. This was on an interpretation of whether sales tax is an incidental matter within the exclusive power of the federal government of the Nigeria. In the Court’s hallowed judgment, it held that the Federal Government has power to make law on the items specified in the sub-items (a) to (f) in respect of international trade and commerce and inter-state trade and commerce, but the States are left with the residuary matter of trade and commerce within a State. The controversy, however, continued with the rift between the State’s sales tax and/or Hotel occupancy and Restaurant consumption and Value Added Tax introduced by the Federal government. The controversy has now snowballed into a struggle between two legislations named Value Added Tax made by both the Federal and State governments. This unending VAT war under Nigeria’s federal Constitution over who is reposed with the responsibility to impose and collect Value Added Tax is the crux of this paper. Doctrinal method of data collection was adopted using analytical approach to review the various statutes, decisions of courts, opinions of experts, journals and internet materials on the subject matter. The paper revealed that the Constitution did not confer on the Federation exclusive power over trade and commerce. The Federal, State and Local governments were accorded their respective shares of powers to control trade and commerce and incidental powers to impose and collect Value Added Tax in Nigeria. It is however, recommended that constitutional amendment is imperative to specify the boundaries of operations of each government in order to avert double taxation in the implementation of the various enactments. Again, the Joint Tax Board should be alive to its responsibilities to avoid unnecessary and intolerable discriminations among the State laws when left open to all.