The Executive Governor of Ogun State.
I write as a citizen and an Accountant who is concerned about the economic revolutionary started by HE Gov. Wike on Value Added Tax (VAT) which Lagos State has followed.
Sir, as we known, Ogun State is one of the first-three States with highest VAT generation in Nigeria. As such, Ogun government should tap into this fiscal federalism and economic autonomy.
Just before i proceed, let me elaborate the word VAT.
VAT is a consumption tax that has been embraced and adopted by many nations across the wolrd. VAT is a consumption tax, it is relatively easy to administer and difficult to evade or escape.
From the perspective of the seller, it is a tax only on the value added to a material, goods or service while from the point of view of an accounting, its by the stage of its distribution or manufacture and From a buyer’s perspective, VAT is a form of consumption tax.
VAT is an indirect tax collected from someone other than the person who bears the cost of the tax or the tax burden.
National VAT rate since the introduction of VAT through the VAT Decree 102 of 1993 has been 5% up until January 2020 when it was increased to 7.5%.
Your Excellency, as a matter of urgency, I urge you to send a proposed Ogun State VAT bill to State Assembly and assent on it before the year runs out.
The bill should includes:
i. A taxable person should be obliged to register with the OGIRS for VAT collection “within six months of the commencement of the Act or within six months of the commencement of business, whichever is earlier.” Failure to register attracts a penalty of N50,000.00 for the first month in which the failure occurs; and N25,000.00 for each subsequent month.
ii. Section to mandates a non-resident company, carrying on business in Ogun State to register for VAT by using the address of the person with whom it has a subsisting contract.
A non-resident company shall include the tax in its invoice while the person to whom the goods and services are supplied shall remit tax in the currency of the transaction.
iii. Section to empowers the Ogun State Internal Revenue Service (OGIRS) to administer and implement the law. The OGIRS would account for money collected in line with the law and do any other things necessary for the assessment and collection of the tax.
iv. Medical technology which have brought about an increase in cosmetic surgeries and procedures should attract VAT.
v. Based on Lagos & Rivers VAT rates of 6% and 7.5% respectively, Ogun should revert to old 5% or 5.5% to attract investors and increase positive rivalry among States of Federation.
vi. The VAT revenue should be shared 65 percent to the state government and 35 percent to the LGAs.
vii. There should be exemption for small businesses with turnover below N25 million as is the case under the national VAT Act.
viii. An importer of taxable goods shall pay to the Service the tax on the goods before clearing.
ix. The list of exempt items should be similar to the national VAT Act including basic food items; medical and pharmaceutical products, medical services; books and educational materials; items covered under the Hotel Occupancy and Restaurant Consumption Law of Ogun State.
x. The bill should provides for a body known as the Value Added Tax Appeal Tribunal which will comprise:
who shall be a legal practitioner of proven integrity with a minimum of ten (10) years experience in tax matters;
(b) One accountant with relevant experience in tax matters;
(c) Three other persons from either the private or public sector whose membership shall in the opinion of the Governor, assist to resolve disputes arising from tax assessment
(ii) The members of the Tribunal shall be appointed by the Governor on the recommendation of the Commissioner of Finance.
(iii) The Tribunal shall assist the Service in resolving disputes arising from tax assessment.
(iv) The Tribunal shall have powers to regulate its own proceedings and may make standing orders for that purpose, and subject to any such standing orders, may function notwithstanding:
(a) Any vacancy in its membership or the absence of any member;
(b) Any defect in the appointment of a member; or
(c) That a person not entitled to do so took part in its proceedings.
(v) Quorum at any meeting of the Tribunal shall be three (3) members.
Finally, if government can proposed this bill and signed into law, it will increase government tax base, revenues, improved state wide standards of living, improved state infrastructures and reduced state debts.
From Remo North LGA.