‘Nigeria needs urgent Supreme Court verdict on VAT dispute’

A Fellow of the Chartered Institute of Taxation of Nigeria (CITN), Dr. Francis Uzoma Ubani, has called on the Supreme Court to deliver a swift judgment in the protracted Value Added Tax (VAT) dispute between the Rivers State Government and the Nigeria Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS). Ubani […]

A Fellow of the Chartered Institute of Taxation of Nigeria (CITN), Dr. Francis Uzoma Ubani, has called on the Supreme Court to deliver a swift judgment in the protracted Value Added Tax (VAT) dispute between the Rivers State Government and the Nigeria Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS).
Ubani said the apex court’s intervention is urgently needed to resolve the constitutional uncertainty surrounding VAT collection and administration in Nigeria, noting that the matter has remained unresolved since a stay of execution was granted by the Court of Appeal in 2021.
According to him, the continued delay has left state budgets, federal revenue planning and taxpayer compliance operating under a cloud of uncertainty.
“We need a swift and urgent Supreme Court ruling to finally break the five-year silence,” Ubani said.
He explained that the controversy dates back to 2021 when the Rivers State Government challenged the constitutional authority of the federal government to collect VAT. A Federal High Court ruled in favour of Rivers State, holding that VAT did not fall within the taxing powers expressly granted to the federal government under the 1999 Constitution.
Following the judgment, Rivers State enacted its own VAT law. However, the FIRS appealed the ruling, and the Court of Appeal subsequently granted a stay of execution pending a final determination by the Supreme Court.
“Five years later, the Supreme Court has yet to make a definitive pronouncement on this critical constitutional and fiscal issue,” Ubani noted.
He argued that prolonged judicial silence on such a significant matter undermines legal certainty and allows temporary administrative arrangements to become entrenched.
“The doctrine that justice delayed is justice denied is particularly relevant in fiscal constitutional litigation. Every year this delay continues, interim administrative practices become more deeply rooted, making administrative convenience appear as constitutional law,” he said.

Ubani acknowledged efforts by the government to modernise tax administration through the 2025 Tax Act, which consolidates existing laws, streamlines compliance procedures and introduces unified digital tax frameworks.

However, he maintained that legislative reforms alone cannot resolve the underlying constitutional question.

“A federal statute, no matter how well drafted, cannot amend the Constitution. The core issue of who constitutionally possesses the authority to impose and collect VAT remains unresolved,” he stated.

The tax expert stressed that the dispute goes beyond administrative procedures and touches on the constitutional ownership of one of Nigeria’s most important revenue sources.

“Every Nigerian pays VAT when purchasing goods and services. The fundamental question is whether the constitutional authority to impose and collect that tax belongs to the federal government or the federating states,” he said.

Ubani described VAT as a consumption tax borne by the final consumer, distinguishing it from taxes on income, profits or capital gains.

He argued that the 1999 Constitution does not expressly mention VAT under either the Exclusive Legislative List or the Concurrent Legislative List, creating the legal vacuum at the centre of the dispute.

According to him, while the federal government relies on provisions relating to taxation of incomes, profits and capital gains, as well as interstate trade, state governments contend that VAT falls within residual matters reserved for states because it is not specifically assigned to the federal government by the Constitution.

He further noted that Nigeria operated state-administered sales taxes before the introduction of a centralized VAT regime through a military decree in 1993, adding that the constitutional validity of that arrangement remains contested under the democratic dispensation that began in 1999.

To address the impasse, Ubani urged both judicial and political action.

He called on the Supreme Court to provide a definitive interpretation of the Constitution and advised lawmakers to pursue constitutional amendments where necessary to establish lasting legal clarity.

He also stressed the importance of maintaining the principle of “one tax, one payment window” and implementing adequate transitional safeguards to prevent multiple taxation and disruption to businesses.

Drawing lessons from other federations, including Australia, Canada and India, Ubani said sustainable solutions require deliberate constitutional design rather than administrative arrangements.

He outlined three possible pathways: granting states constitutional authority over intra-state VAT transactions, adopting a dual VAT model that separates federal and state responsibilities, or amending the Constitution to establish a harmonized VAT framework that balances federal and state interests.

“The most important thing is to end the uncertainty. Nigeria needs a clear constitutional framework that provides certainty for governments, businesses and taxpayers alike,” he said.