Adopt principle of derivation in VAT sharing, Abiodun tells FIRS

The Governor of Ogun State, Prince Dapo Abiodun, has urged the Federal Inland Revenue Service (FIRS), to employ the principle of derivation in sharing Value Added Tax (VAT), in view of the status of the state as the host to largest industries in the country.

He made the call on Monday while receiving the management staff of FIRS led by its Chairman, Mr Mohammed Nami, who was on a courtesy call to his office at the Governor’s Office, Oke-Mosan, Abeokuta, on Monday.

The governor said the amount of money accrued to the state coffers from VAT does not reflect its position as the state with the highest concentration of industries, hence the need for FIRS to adopt the principles of derivation in the distribution of VAT.

Abiodun said: “There is no meaningful industry that is not here, however, when VAT is computed, what we see is different. Because these industries have their headquarters in Lagos, Lagos gets the benefit of VAT. I believe we should revisit this and we should try to find a way to be more equitable by compensating us.

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“I believe that most of the factories that are here have distributors and when they take delivery of their goods here in Ogun State, VAT is paid at the point of sales and further down the line. We will like the principles of attribution or derivation be used in the distribution of VAT.”

He said the state with the largest deposit of solid minerals was blessed with silica, while one-third of the entire state has limestone deposit, saying this had enabled the state to generate the highest revenue to the coffers of the Federal  Government.

The governor solicited for a synergy between the Federal Inland Revenue Service and the Ogun State Internal Revenue Service in the exchange of information between the two agencies in the area of Corporate Taxpayers and others in their various tax net.

“We are also looking for how to collaborate in the area of capacity building. We appreciate that the Federal Inland Revenue Service has lots of programmes that are aimed at training and capacity building and we believe that we can tap into that to help our tax administrators up to the Local Government level for better performance,” he said.

The governor revealed that the state revenue service had over the last eight months of his administration, recorded the highest revenue since the creation of the agency, without recourse to the land sale.