News
Nigeria Tax Spat Reignites Federalism Debate
A legal battle between the federal government and states over sales tax is fueling fierce debate about federalism in the country as politicians jockey for position before 2023 elections.
The spat –- whether federal or state governments have the right to collect value-added tax (VAT) –- may be about money, and the sum at stake runs into billions of dollars.
According to AFP, but the squabble also reflects long-standing questions about how Nigeria is governed and how wealth is shared in the continent’s top oil producer.
How the dispute ends may open up more state autonomy, analysts say, as wealthier southern regions test federal management of issues from oil resources and security policing to cattle grazing rights.
In August, a court in southern Rivers State, Nigeria’s petroleum heartland, ruled states should be responsible for collecting VAT and not the Federal Inland Revenue Service (FIRS).
Ezenwo Nyesom Wike, Rivers State governor, a staunch opposition Peoples Democratic Party (PDP) leader, pushed through a law authorising local collection of VAT, warning FIRS against any “sabotage.”
Southern Lagos State, the nation’s economic powerhouse including the commercial capital Lagos, quickly followed with its own law to collect VAT.
After a federal government appeal, the dispute is caught up in competing demands, with Abuja considering a Supreme Court challenge.
Abubakar Malami, attorney general, last week told reporters that only the national assembly could legislate on how VAT is levied.
“The federal government is looking at all options at its disposal, including the possibility of involving the jurisdiction of the Supreme Court,” he said.
Under Nigeria’s system, FIRS collects VAT centrally and the resources are distributed across federal, state and local governments.
VAT receipts in 2020 were N1.5 trillion or $3.6 billion. Under the current system the federal government gets 15 percent, with the rest split between states and local governments.
But richer southern states like Lagos and Rivers — Lagos alone produces around half of Nigeria’s VAT — have long complained they end up paying for poorer states mostly in the agricultural north but also some southern ones.
They want more “fiscal federalism,” meaning getting a bigger share of the VAT they collect and more responsiblity to manage their own affairs.
“What we are after is to ensure that this money is used for the people of Lagos State, and that is exactly what we have achieved,” Setonji David, a Lagos assembly lawmaker, told Channels TV.
– ‘Restructuring’ Nigeria –
The “restructuring” debate often resurfaces during election times in Nigeria, which became a single entity under British colonial rule in 1914 when the mainly Muslim north was joined with the mostly Christian south.
Regional identities for Nigeria’s major ethnic groups are often fiercely guarded — sometimes with separatist rhetoric — even as the federal government promotes national unity.
“We will see more of these scenarios, where different constituent entities will try to assert more control economically using political means over what is extracted or generated from their territories,” SBM Intelligence analyst Tunde Ajileye said of the VAT fallout.
The tax debate is especially sensitive after the coronavirus pandemic that battered Nigeria’s oil revenues and pushed Africa’s largest economy into its second recession in five years.
During the pandemic, the federal government increased VAT from five percent to 7.5 percent, providing much-needed revenue.
Eurasia Group’s Amaka Anku said decentralisation of tax management is unlikely, as most states lack expertise or willingness.
“Outside Lagos and the federal capital territory (Abuja), states are likely to be negatively affected by a decentralization of VAT collection, making the proposition politically unfeasible.”
But the VAT fight also plays into the heated tones before the 2023 election to replace President Muhammadu Buhari, a northern Muslim in power since 2015.
– Election tensions –
Critics of Buhari say since he came to power he has favoured northeners in a way that has intensified calls for more autonomy for states and even calls for separatism by some southern agitators.
Officials of the All Progressives Congress’ ruling party dismiss such claims and point to government investments across north or south.
But mass kidnappings, attacks and insecurity have also prompted calls from some southern leaders to have control over their own security forces.
VAT has joined a list of disputes where southern and northern leaders appear to be digging in on rival sides.
One of those is “zoning” — an unofficial power-sharing deal that rotates the presidency between candidates from the north and the south.
After two terms with northern Buhari, many southern leaders want a president from their region. Many leaders from the north disagree.
But despite the squabbling, analysts say a compromise on VAT is the likely outcome.
“The good thing about this is there has not been a use of violence or rhetoric, it is more the use of the court process,” said SBM’s Ajileye.
“I expect there will be some political settlement ultimately.”
African law enforcement agencies arrested 651 suspects and recovered over $4.3 million in a joint operation targeting investment fraud, mobile money scams, and fake loan applications.
As INTERPOL revealed on Wednesday, Operation Red Card 2.0 identified 1,247 victims between December 8 and January 30 while targeting cybercrime operations linked to over $45 million in financial losses.
Authorities across 16 countries also seized 2,341 devices and took down 1,442 malicious websites, domains, and servers during this joint action coordinated by the African Joint Operation against Cybercrime (AFJOC).
In Nigeria, police officers dismantled an investment fraud ring that was recruiting young people to run phishing, identity theft, and fake investment schemes, taking down over 1,000 fraudulent social media accounts in the process.
They also arrested six members of a Nigerian cybercrime gang that used stolen employee credentials to breach a major telecom provider.
Kenyan investigators also apprehended 27 suspects while investigating fraud networks that used social media and messaging platforms to lure victims into fake investment schemes.
In Côte d’Ivoire, 58 suspects were arrested as part of a crackdown on predatory mobile loan apps that targeted victims with hidden fees and abusive debt-collection practices.
“These organized cybercriminal syndicates inflict devastating financial and psychological harm on individuals, businesses and entire communities with their false promises,” said Neal Jetton, the head of INTERPOL’s Cybercrime Directorate.
“Operation Red Card highlights the importance of collaboration when combatting transnational cybercrime. I encourage all victims of cybercrime to reach out to law enforcement for help.”
One year ago, African law enforcement arrested another 306 suspects in the first stage of this INTERPOL-led operation targeting cross-border cybercriminal networks.
This is the latest INTERPOL operation targeting African cybercrime, with thousands of arrests and multiple multimillion-dollar operations disrupted or dismantled in recent years, following Operation Serengeti and Operation Africa Cyber Surge.
Lagos State Government has commenced the implementation of a 5% Withholding Tax (WHT) deduction on gaming winnings, in line with applicable Nigerian tax laws and regulatory directives governing the gaming industry.
The deduction applies to net winnings from licensed gaming platforms operating within Lagos State and is deducted at the point of payout. All licensed gaming operators in Lagos have been directed to comply immediately with the framework.
Under the new arrangement, 5% of qualifying gaming winnings will be automatically deducted before payment is made to players and remitted to the Lagos State Internal Revenue Service (LIRS) as the statutory tax authority.
According to the State Government, the measure forms part of Lagos’ broader drive to strengthen tax compliance, transparency, and accountability in the rapidly expanding gaming sector.
Players are required to provide their National Identification Number (NIN) in compliance with KYC (know your customer) rules, while all deductions and remittances will be handled by licensed operators in line with regulatory requirements.
Players will receive their winnings net of the statutory deduction, with proper records maintained for transparency. The WHT deducted also serves as a tax credit to the player.
All licensed gaming operators in Lagos State have now been formally directed to commence the deductions with immediate effect.
Federal High Court in Abuja, on Tuesday adjourned the $150 million dollars suit filed by Chianugo Peter, a Nigerian, against Google LLC and GoDaddy.com LLC over shutdown of his YouTubeAudio.com domain name until April 22 for hearing.
The case, which was before Justice Obiora Egwuatu, could not proceed due to the absence of the judge in today’s proceedings.
Although Emmanuel Ekpenyong, Peter’s lawyer, and Mark Mordi, who is counsel to Google LLC, were in court, Justice Egwuatu was said to be in another official assignment.
The matter was consequently fixed for April 22 for hearing.
Peter had filed the suit over allegations bordering on the shutdown of his YouTubeAudio.com domain name after eight years of promotional and marketing efforts in breach of the contract.
Peter, through his lawyer, named GoDaddy.Com LLC and Google LLC as the 1st and 2nd defendants in the suit filed on April 14, 2023 and marked: FHC/ABJ/CS/238/2023.
In his earlier originating summons filed by Ekpenyong of the law firm of Fred-Young & Evans LP, the Nigerian sought a $150 million in compensation from Google LLC and GoDaddy.com LLC for the alleged cyberspace contract breach.
The plaintiff alleged that the defendants shut down his domain and business name: YouTubeAudio.com and transferred the rights over the name to Google LLC, an American multinational technology company.
Google LLC, in its initial statement of defence dated Nov. 9, 2023, and filed Nov. 10, 2023, by its lawyer, Mr Mordi, SAN, of the law firm of Aluko & Oyebode, urged the court to dismiss Peter’s suit as being unmeritorious and lacking in merits.
Justice Egwuatu had, in April 2024, gave Chianugo Peter the go-ahead to amend his originating processes after his lawyer moved the application for same and it was not opposed by the defence counsel.
In his amended statement of claim dated April 29, 2024, Peter sought ten reliefs.
He sought a declaration that GoDaddy.com was wrong to shut down the YouTubeAudio.com domain name on Dec. 7, 2022 and that Google was wrong to remove “YTAudio” with its website youtubeaudio.com from its Google PlayStore on Dec. 25, 2023 without adequate compensation to him.
He said this is notwithstanding that YouTubeAudio.com domain and business name is different and distinct from YouTube trademarks.
Chianugo Peter wants the court to declare that he is entitled to compensation from the defendants for the loss of the YouTubeAudio.com brand and goodwill which has accrued on the brand and domain name for eight years of promotional and marketing works from July 2, 2015 to Dec. 7, 2022.
He sought an order directing the defendants to pay the sum of $50 million to him for promotional and marketing works on the YouTube Audio business name and YouTube Audio.com domain name for eight years from July 2, 2015 to Dec. 7, 2022.
He sought a $100 million in damages for loss of anticipated profits associated with the brand equity and goodwill of YouTube Audio and YouTube Audio.com domain name.
Peter also sought from the defendants, the sum of 50 million naira to enable him to carry out fresh registrations of its new name and secure an alternative domain name to host its application to attract users.
The Nigerian sought an order directing the defendants to pay the sum of 10 million naira to him for prosecution of the suit.
Alternatively, Peter prayed the court for an order for GoDaddy.com to reinstate and hoist the YouTubeAudio.com domain name which was shut down on Dec. 7, 2022 and for Goggle to also reinstate YouTubeAudio.com on its Google PlayStore platform which was unilaterally removed on Dec. 25, 2023.
Chianugo Peter submitted that he acquired rights over YouTubeAudio.com domain name from Go Daddy.com LLC who conducted a search before confirming that he could make use of the name.
The plaintiff averred that he promoted the domain and business name from 2014 to 2022 and even wrote to Google to introduce YouTubeAudio’s services and to partner with it in 2014 and 2021 but received no response from it on both occasions.
He said in February 2021, he applied for and YouTubeAudio.com was registered on Google Adsense platform for displaying advertisement on the website.
Besides, Peter said in August 2021, the domain and business name was registered on Google Playstore.
According to him, the plaintiff consistently paid GoDaddy.com LLC for registration and use of the domain name from 2015 to 2022.
But Google LLC, in its amended statement of defence and counterclaim dated and filed May 31, 2024, averred that its registration of the YOUTUBE trademarks at the Trademarks Registry gives it the exclusive night to the use of the said trademarks.
It submitted that it has incurred expenses in the sum of 24,040 64 dollars in dealing with Peter’s “deliberate infringement of the counterclaimant’s YOUTUBE trademarks.”
The company, therefore, sought a declaration that Peter’s registration and use of the YouTubeAudio business name with BN 2395035 at the CAC is an infringement of its YOUTUBE registered trademarks.
It prayed the court for an order directing Peter to pay the company the total sum of $24,040.64 being the expenses incurred in dealing with his infringement of the YOUTUBE registered trademarks.
It equally sought an order directing the plaintiff to pay the company the cost of defending the suit.
In his amended reply to Google’s amended statement of defence dated 12th July 2024, Peter responded that it is not in doubt that Google LLC owns YouTube trademarks, however, YouTubeAudio is distinct and different from YouTube trademarks.
Chianugo Peter submitted that Google LLC, being a foremost search engine in the world, knew that he had earlier written to it, that he was making use of the YouTubeAudio domain name for the past eight years without any objection or caveat by either GoDaddy.com or Google.
“Hence, Google LLC is estopped from claiming any right over the YouTubeAudio domain name,” he said.
GoDaddy.com LLC had neither filed any process nor represented in court.
ACAMB Educates Content Creator to Curb Misinformation on Bank Recapitalisation
Banks, Telcos Settle Four-Year Dispute over N300Bn USSD Debt
NITDA Warns Nigerians of Actively Exploited Microsoft Office Vulnerability
INTERPOL Arrests 651, Recovers $4.3m from Cybercrime in Nigeria, Others
NDPC Investigates over 1,000 Schools over Data Privacy Compliance
Nigeria’s 9 Top FinTech Firms Valued at $10.6Bn in January 2026
DG NCC Tasks University Dons on Research Commercialization, IP Management to Build Global Competitive Ecosystems
Firm Detected a Fivefold Surge in QR Code Phishing Attacks in the Second Half of 2025
Kaspersky Launches OT Calculator to Align Cybersecurity Investments with Business Goals
Firm Detected a Scam Exploiting OpenAI’s Teamwork Features
Telecom3 days agoTerra Moves to Expand in African Drone Sector, Secures $22m Funding
Telecom3 days agoTemu Assures Compliance Amid Nigeria Data Privacy Probe
E-Financial3 days agoDMO Offers ₦800bn FGN Bonds in February Auction Surge
E-Financial3 days agoDanjuma, Taj Bank Staff Jailed for 5 Years over N22m Fraud
E-Financial3 days agoKPMG Outlook Reveals Financial Services CEOs Double down on AI, Resilience and Growth in 2026
E-Financial2 days agoEcobank Nigeria Fully Repays $300m Eurobond Notes
News3 days agoChianugo, Nigerian $150m suit Against Google, GoDaddy.com Stalled due Judge’s Absence
E-Financial2 days agoZenith Bank Warns Public Over Fake Jim Ovia Investment Videos