(By Iheanyi Ezinwo) -The new regime that allows states to collect value added tax consequent upon the Federal High Court decision in the matter between Rivers State and the Federal Government of Nigeria is attracting the attention of Rivers people both at home and abroad.
One of the Rivers people in diaspora who has been following the developments at home is Chief Ojike Wekulom, who retired as Assistant Director from the Federal Inland Revenue Service not long ago, but relocated to the United States of America about two years ago.
Responding to a question in a chat with the publisher of Notable Outcome on how to offset input VAT paid in other states from the output VAT to be paid to Rivers state, Ojike Wekulom, an indigene of Abua in the Abua/Odual Local Government Local Government Area of Rivers State volunteered some explanations:
“The reason the European model adopt the destination principle is to make the prices of their goods and services comparatively low for export. So if you buy goods from UK and you want to bring it to Not, they will refund the VAT you paid on it at the airport.
When you get to Not, the customs charge you the VAT. This is on the destination principle.
“In the European model, previously paid VAT or input VAT from other jurisdictions can be capitalized. You can not claim it rather it is treated as cost of doing business and accounts for the prices you will set for your goods”.
The University of Port Harcourt pioneer student, who served as chairmen of the Rivers State Board of Internal Revenue during the administration of Dr. Peter Odili, also hinted that, “in the case of principle of origin, you charge the VAT at the point of purchase, or manufacture, or where the services are rendered . Where they are going, either in the state or other VAT jurisdictions is not your business”.
It would be recalled that, Ojike Wekulom, who was a staff in the Rivers State Civil Service had to transfer his services to the the Federal Civil Service after he came out tops in a competitive process, to represent the State at the Modified Value Added Tax Commission in 1993. He worked with the Federal Inland Revenue Service until his retirement as Deputy Director in 2016.