FG is highest contributor to VAT – Presidency

Ajuri Ngelale and Information Minister, Lai Mohammed

The Presidency has prided the federal government on being the highest contributor to the Value Added Tax, VAT, contrary to the idea that it is Lagos.

The President’s Special Assistance on Public Affairs, Ajuri Ngelale stated this when he appeared on Channels Television’s breakfast show, Sunrise Daily on Monday.

Ngelale declared that he highest percentage of VAT comes from Port, which is owned by the federal government, irrespective of the fact that they are located in the Southern part of Nigeria.

He also argued that the federal government’s contracts awarded by Ministries, Departments and Agencies (MDAs)  in Abuja yield the second-largest volume of VAT.

 Ngelale said, “I do disagree on the notion that states are by themselves generating VAT en masse and the Federal Government is trying to hijack (it).

“In 2020, the nation generated about N1.5trn in VAT. We have about 60 per cent of VAT coming from imports at the ports. As we know, ports infrastructure in the country is not controlled by the state governments, so they cannot say that it is their revenue; it is controlled by the Federal G“Aside from the fact that we have a book coming from imports, we also have that second to Lagos is Abuja with about N202 billion collected and the reason why is because Abuja is the site of federal ministries, departments and agencies and a huge bulk of that collection in the country was coming from VAT collected on contracts.

“So, when we create the impression that states collect these VATs and the Federal Government is hijacking it and trying to share it when in fact, it only (belongs to) Lagos or Rivers, I think it is a gross over-simplification.”

VAT has been a subject of controversy over who is empowered to collect it between the Federal Inland Revenue Service, FIRS, and the states.

The tension heightened after a Federal High Court, sitting in Port Harcourt ruled in favour of Rivers and the state enacted a VAT law to further empower it. Consequently, Lagos toed the path of Rivers enacting the VAT law.

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