By Adedapo Adesanya
Amid the recent hostility between the states and the federal government, the Lagos State House of Assembly on Thursday passed the Value Added Tax (VAT) Bill.
The Assembly, led by the Speaker, Mr Mudashiru Obasa, directed the Acting Clerk of the House, Mr Olalekan Onafeko, to transmit a clean copy of the bill to Governor Babajide Sanwo-Olu for assent.
Earlier on Monday, Mr Obasa had said the Lagos State government generated N500 billion annually from VAT but only received a small amount from the federal government.
According to analysis, Section 4 of the bill provides that the state will charge VAT at the rate of six per cent on the value of goods and services except certain goods and services listed under Part III of the schedule which shall be taxed at zero rates, these are – basic food items; medical and pharmaceutical products, medical services; books and educational materials; items covered under the Hotel Occupancy and Restaurant Consumption Law of Lagos State, amongst others.
Section 7 empowers the Lagos State Internal Revenue Service (LIRS) to administer and implement the law.
The LIRS would account for money collected in line with the law and do any other things necessary for the assessment and collection of the tax, meaning that the Federal Inland Revenue Service (FIRS) can’t carry out this function anymore.
Section 8 states that taxable persons are to register for the tax within six months of the commencement of the law or six months of commencement of business, whichever is earlier.
According to section 9, non-resident companies are to register for the tax if they carry on business in the state, using the address of the person with whom it has a subsisting contract as its address for purposes of correspondence relating to the tax.
Section 16(2) provides that an importer of taxable goods shall pay to the service the tax on the goods before clearing.
The bill also provides for a body known as the Value Added Tax Appeal Tribunal.
In terms of sharing, Section 33 states that VAT revenue shall be shared 75 per cent to the state government and 25 per cent to the Local Government Areas, a decision that has been decried by LGAs who want a 50-50 sharing formula.
Section 15 noted that a monthly remittance and returns are due by the 21st of the subsequent month in a manner specified by the LIRS. This implies that the first return under the law will become due by the 21st of the month after enactment.
There is no exemption for small businesses with turnover below N25 million as is the case under the national VAT Act.
The House also passed the bill that prohibits open cattle grazing in the state. The two bills were passed after unanimous votes by the lawmakers at the sitting where the bills were read the third time.
Dipo Olowookere