The Tax Appeal Tribunal

The Tax Appeal Tribunal, Lagos Zone on 10 September 2020 delivered its judgment in Ess-Ay Holdings v. FIRS.

There were two issues for determination, namely;

1). Whether rental incomes are subject to Value Added Tax under the VAT Act?

Held: Lease in real property whether for commercial or residential, does not amount to a supply of goods and services. They are incorporeal rights which are outside the scope of the VAT Act.

2). Whether the provisions of the FIRS Information Circular No. 9701 dated 1st January 1997 seeking to exempt only rents from residential properties is ultra vires the Respondent?

Held: An information circular is merely information to the general public containing what the FIRS considers to be its interpretation on tax laws. It is not a subsidiary legislation and does not command the force of law. An amendment to the VAT cannot be done by an information circular.

With this judgment, the FIRS can no longer demand VAT on leases for commercial and residential purposes.