TAX NEWS - June 2010

Nigeria Tax: Tax agency denies double VAT payment on Reps' cars

The Federal Inland Revenue Service (FIRS) has washed its hands off the allegation of double taxation levelled against it by some groups calling for a probe of the N2.4 billion worth of 380 units of Peugeot 407 cars that were purchased by the House of Representatives in 2008.

The federal tax agency specifically denied collecting a double Value Added Tax (VAT) on the luxury cars in response to enquiries made by NEXT, following a petition addressed to FIRS urging it to clear its name of the corruption allegation.

A non-governmental organisation, the Human Rights Justice and Peace Foundation (HRJPF), had forwarded separate petitions to the EFCC, the Presidency, Attorney-General of the Federation, and Minister of Justice, as well as the Federal Inland Revenue Service.

The petition, dated June 1, 2010, and signed by the President of HRJPF, Chidi Nwosu, called on the EFCC to investigate the allegation that the leadership of the House made about N530 million on the 380 units car deal.

"We have monitored with keen interest, the investigation and media reports on the scam involving the Honourable Speaker of the Federal House of Representatives arising from the purchase of 380 No - 407 auto from the Peugeot Automobile Nigeria Ltd."

The group has since stepped up its activities with a call for the prosecution of the Speaker of the House of Representatives, Dimeji Bankole, on other alleged corrupt activities, resulting on Wednesday in a lawsuit filed at a Federal High Court in Abuja seeking to compel the EFCC to prosecute Mr. Bankole.

Efforts made during the week to speak with the Executive Chairman of FIRS, Ifueko Omoigui-Okauru, on the allegation was not successful as she was said to have travelled to Amsterdam, Netherlands, with another scheduled journey to the United States of America in the offing.

The agency's Director of Corporate Communications, Vincent Akeredolu, said only Mrs. Omoigui-Okauru could give a formal, final word on the allegation that has cast a slur on the manner FIRS currently carries out its constitutional responsibilities.


No direct tax payment

But a senior staff of the agency, who craved anonymity, absolved FIRS of the double taxation allegation and insisted that the tax agency does not receive any tax payment directly.

"FIRS does not collect taxes directly from government, individuals, and corporate citizens. What it does is to act as a driver of the process for the payment of taxes as at when due through related documentation. It is usually paid to the Central Bank of Nigeria, which forwards such details to FIRS through the Auditor-General of the Federation's office. So, FIRS has nothing to do with the double taxation that the House might have paid for the cars," he said.

"While it is very possible that the House of Representatives could have indeed paid double VAT on the cars, what we are saying is that it has not come to FIRS notice, as it has not received such notice from the CBN as now. But our advice here is that investigators like you and other concerned people should request for the receipts of the payments, since VAT is usually paid to the CBN through banks."

According to HRJPF, the payment of N117, 974,325.00k as VAT to the FIRS was unlawful, as it amounted to a double taxation and waste of tax payers' money, since VAT was already inclusive of the original cost of the cars quoted by Peugeot Automobile of Nigeria (PAN) at N2,359,486,500.

Asked what process is currently available for any individual or corporate citizen who inadvertently pays a double tax into the treasury of FIRS to reclaim such payment, Mr. Akeredolu said FIRS is currently creating the Tax Refund Process, but that it was yet to take-off under the National Tax Policy , owing to inadequate funding by government.