From Uche Usim, Abuja
The Federal Inland Revenue Service (FIRS) yesterday said there is no place in the world where sub-national governments champions VAT administration as it will turn controversial.
The agency said the decision of the Federal High Court to grant powers to states to administer VAT made it difficult for businesses to operate under the new dispensation.
Group Lead, Special Operations Group for FIRS, Mathew Gbonjubola, stated this in an interview with journalists in Abuja.
“VAT works only at a national level, but not at a sub-national level. There is no country in the world where VAT works at the sub-national level.This is because the VAT depends on the input-output mechanism.”
He said contrary to misconceptions in some quarters, FIRS administered VAT on behalf of the three tiers of government and not for the Federal Government alone.
He said revenues from VAT was administered under an arrangement that allows the Federal Government to collect 15 per cent, states 50 per cent and local governments 35 per cent.
The implication of this, according to him, is that the state and local government took about 85 per cent of VAT proceeds.
He said, “The VAT is not paid to the Federation Account but to VAT pool account for distribution to the three tiers of government. It is after the sharing that the portion of the Federal Government is paid to the Consolidated Revenue Fund Account.”