May 17, 2016

Magnus Amudi: VAT on Imported Services –Vodacom Business Nig. Limited v. FIRS


Under the Nigerian Value Added Tax Act 2007 (the “Act”), “imported services” are liable to the imposition of value added tax (“VAT”) as they are not specifically listed under the tax-exempt items. The Act defined “Imported service” as service rendered in Nigeria by a non-resident person to a person inside Nigeria.

As a general rule, a foreign company which supplies goods and services in Nigeria without a physical presence in Nigeria is neither required to register for VAT with the Federal Inland Revenue Service nor charge/issue a VAT invoice.  This is because the foreign company cannot be said to be carrying on business in Nigeria, and has no physical presence in Nigeria. This position was supported by the Abuja Zone of the Tax Appeal Tribunal (established to decide tax disputes) (“TAT”) inGazprom Oil & Gas Ltd v. Federal Inland Revenue Service (“FIRS”).Consequently, the consumers of such goods and services in Nigeria were not subject to pay VAT.


However, the Lagos Zone of the TAT in Vodacom Business Nigeria Ltd v. FIRS supported the decision in Gazprom above, but only to the extent that a foreign company which supplies goods and services in Nigeria without a physical presence in Nigeria is neither required to register for VAT with the Federal Inland Revenue Service nor charge/issue a VAT invoice. It however dissented with the part of the decision that stated that the Nigerian consumers of such imported services are not subject to VAT. It relied on the destination principle in reaching this conclusion. By this recent decision, it appears that consumers of imported services are obligated to pay VAT in Nigeria.

As such, it is expect that the FIRS will seek to enforce this decision pending the determination of the appeal of Vodacom to the Federal High Court.
Ed’s Note- This article was originally published here


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