Nigerian Court Affirms FIRS' Powers to Collect VAT on Digital Food and Ride-Hailing Services
A Federal High Court in Lagos has upheld the authority of the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT) on food and transportation services provided through digital platforms like Bolt. The ruling, delivered on Thursday, July 24, 2025, by Justice Akintayo Aluko, dismissed an appeal filed by Bolt's Nigerian operators and affirmed an earlier decision by the Tax Appeal Tribunal (TAT).
Key Aspects of the Ruling:
Dispute Origin: The dispute began when Bolt's operators challenged the FIRS's directive to impose VAT on services rendered by independent drivers and food vendors using the Bolt platform. Bolt argued that it merely acts as an intermediary connecting users with service providers and does not directly offer transportation or food vending services, thus it should not be classified as a "taxable supplier" under the VAT Act.
FIRS's Stance: The FIRS, on the other hand, argued that it acted within its legal powers under Section 10(3) of the VAT Act by appointing digital platforms like Bolt as agents for VAT collection. The FIRS emphasized that it would be impractical to monitor and collect VAT from individual drivers and food vendors across the country, making the appointment of the platform a necessary streamlining measure for tax compliance.
Tax Appeal Tribunal (TAT) Decision: The Tax Appeal Tribunal had initially ruled in favor of the FIRS in May 2023, validating the FIRS's directive. The TAT held that suppliers of taxable goods and services (food vendors and ride-hailing drivers) listed on Bolt's platform were legally required to charge and remit VAT.
Federal High Court's Affirmation: Justice Aluko of the Federal High Court affirmed the TAT's decision, stating that "There is no valid reason to disturb the judgment of the Tribunal." The judge found that the FIRS acted within the law by appointing Bolt as a collection agent.
Costs Awarded: The court also awarded N1 million in costs against the appellants (Bolt's operators) in favor of the FIRS.
Impact on Digital Economy Taxation: This ruling is significant for the taxation of the digital economy in Nigeria. It solidifies the FIRS's approach to leverage digital platforms as collection agents for VAT on services facilitated through their ecosystems. This aims to broaden the tax net and ensure compliance in a rapidly evolving service sector.
Challenges for Platforms: While FIRS sees this as streamlining, digital platforms may view it as an additional administrative burden and a potential challenge to their business model, as they now bear the responsibility of ensuring VAT compliance from a vast network of independent service providers.
This judgment further clarifies the legal framework for VAT collection on digital services in Nigeria, emphasizing the FIRS's powers to adapt tax administration to the realities of the modern economy.
I'm Aisha shehu
Talksocialtalka News
