TAT upholds FIRS’ appointment of non-resident suppliers as agents of VAT collection for taxable supplies in Nigeria

The Tax Appeal Tribunal (TAT or “the Tribunal”) Lagos Zone, in the case between Bolt Operations OU (“Bolt” or “the Company” or “the Appellant”) and Federal Inland Revenue Service (“FIRS” or “the Service” or “the Respondent”) has held that the FIRS validly exercised its powers under the Value Added Tax (VAT) Act to appoint Bolt, a non-resident supplier (NRS), as agent of collection of VAT from both the activities of the food vendors and drivers that use the Company’s platform to provide services to customers.

The Tribunal also clarified that the FIRS’ Guidelines on Simplified Compliance Regime for Value Added Tax (VAT) for Non-Resident Suppliers (the Guidelines) is not ultra vires Section 10 of the VAT Act.

Facts of the case

The Appellant is a non-resident mobility service company, with headquarters in Estonia. The Company offers a range of services including the facilitation of ride-hailing, food and grocery delivery, and car-sharing services to independent businesses and consumers, including Nigerians, through its mobile application platform.

The Appellant’s business model is to connect sellers (i.e., independent businesses such as restaurants, cab drivers, etc.) with buyers (i.e., consumers). The independent businesses are not employees of the Appellant and earn their income/ fees directly from the consumers while Bolt earns a percentage of the income as commission for the use of its platform. The Company alleged that it is fully compliant with the provisions of Section 10 of the VAT Act (“the Act”) on compliance obligations of an NRS and remits the VAT charged and collected on its commission. Therefore, the Company objected to its appointment by the FIRS for the collection and remittance of VAT in respect of the services provided by the sellers to the consumers.

The FIRS, however, insisted that the Appellant was obliged to collect VAT on all invoices processed through its platform, regardless of whether the Appellant is the supplier of the goods or services. Therefore, the FIRS reiterated via its letters of 4 February 2022 and 11 April 2022 respectively, that its appointment of the Company as an agent for VAT was consistent with the provisions of the VAT Act.

The Appellant, dissatisfied with the Respondent’s decision, filed an appeal dated 6 July 2022 before the Tribunal.

Issues for determination

Based on the arguments submitted by both parties, the Tribunal adopted the following issues for determination:

• Whether the Respondent erred in law when it appointed the Appellant, a non-resident supplier as the agent to charge, collect and remit VAT on supplies made by Nigerian resident suppliers to their customers using the Appellant’s platform?
• Whether the Respondent’s Guidelines that deemed the Appellant as the supplier and the party primarily responsible to charge, withhold and remit VAT on taxable supplies by resident Nigerian suppliers onboarded on the Appellant’s platform is ultra vires Section 10 VAT Act?
• Whether it is lawful to appoint the Appellant as the party responsible for charging taxable supplies made by Nigerian resident suppliers who are exempted from VAT obligations by virtue of Section 15(2) of the VAT Act.
• Whether the Respondent erred in law when it imposed an agency arrangement between the taxable suppliers and the Appellant for purposes of charging VAT, when no such agency arrangement had been willfully entered into between both parties?