The Court of Appeal in Abuja has stopped the governments of Rivers and Lagos from collecting Value Added Taxes (VAT).
In a ruling on Friday, Justice Haruna Simon Tsanami, also directed that the law passed by Rivers State House of Assembly and assented to by Governor Nyesom Ezenwo Wike be put on hold.
The judge gave the order hours before Governor Babajide Sanwo-Olu signed the law on VAT.
Sanwo-Olu signed the law moments after he arrived the state from Abuja.
The appellate court’s decision followed an application by the Federal Inland Revenue Service (FIRS), seeking a stay of execution of the order of a Rivers State high court in the matter.
A Federal High Court in Port Harcourt had in August upheld the powers of the state to collect Value Added Tax (VAT) and Personal Income Tax.
The court also issued an order of perpetual injunction restraining the FIRS and the Attorney General of the Federation, from collecting, demanding, threatening and intimidating residents of Rivers to pay to FIRS, personnel income tax and VAT.
Both Rivers and Lagos state governments have already enacted legislations to give effect to the judgment in respect of VAT.
An earlier application by the FIRS to the high court in Rivers to stay execution of the judgment was on Monday refused by Justice Stephen Dalyop Pam on the grounds that the application would negate the principle of equity as the state legislature had already enacted law on the VAT collection.
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