This case revolves around the legality of the Federal Inland Revenue Service (FIRS) appointing Bolt, a ride-hailing and delivery platform, as a Value Added Tax (VAT) collection agent for services rendered through its platform. Bolt, operating in Nigeria, facilitates connections between users seeking transportation or food delivery services and independent drivers and vendors who provide these services. The core issue stemmed from the FIRS’s assertion that Bolt, despite not directly providing these services, should collect VAT on transactions conducted through its platform. Bolt contested this position, leading to a legal battle that traversed the Tax Appeal Tribunal and ultimately landed in the Federal High Court.
Bolt’s Nigerian operators initially challenged the FIRS’s VAT imposition before the Tax Appeal Tribunal, arguing that the platform merely acts as an intermediary connecting users with independent service providers. They contended that characterizing Bolt as a “supplier” under the VAT Act was erroneous since the company itself doesn’t offer transportation or food vending services. This initial challenge was unsuccessful, with the Tribunal ruling in favor of the FIRS. Dissatisfied with the Tribunal’s decision, Bolt appealed to the Federal High Court. Their appeal centered on the validity of their appointment as VAT collection agents, asserting that it contravened the provisions of the VAT Act, particularly Section 10.
Bolt’s legal team advanced several arguments before the Federal High Court, emphasizing that the FIRS’s Simplification Guidelines misconstrued Bolt’s role by classifying it as a direct supplier. They reiterated that Bolt merely facilitates connections and does not directly provide the services subject to VAT. Furthermore, they argued that the Tribunal’s decision failed to address the specific conditions outlined in subsections (1) and (2) of Section 10 of the VAT Act, which stipulate the requirements for appointing VAT collection agents. Additionally, Bolt challenged the Tribunal’s assertion that they lacked the legal standing (locus standi) to question their appointment as a VAT collection agent. They accused the Tribunal of basing its decision on legal provisions that were neither pleaded nor argued during the proceedings.
The FIRS, represented by its legal counsel, countered Bolt’s arguments by advocating for the upholding of the Tribunal’s decision. They characterized Bolt’s arguments as speculative and lacking legal basis. The FIRS maintained that Bolt’s role as a facilitator of transactions through its platform placed it within the ambit of the VAT Act’s provisions for appointing collection agents. They argued that the Tribunal’s decision was sound and aligned with the law. The clashing legal interpretations of the VAT Act and its applicability to digital platforms like Bolt formed the crux of the legal battle.
Justice Akintayo Aluko of the Federal High Court, after considering the arguments presented by both sides, delivered his judgment. He affirmed the Tax Appeal Tribunal’s decision, thereby upholding the FIRS’s authority to appoint Bolt as a VAT collection agent. While the judge found merit in one of Bolt’s arguments, he ultimately ruled in favor of the FIRS on the key issues concerning the validity of the appointment. He dismissed Bolt’s appeal and awarded costs of N1,000,000 against the appellants. This judgment effectively confirmed the FIRS’s interpretation of the VAT Act and its application to digital platform businesses operating within Nigeria.
The court’s decision has significant implications for the digital economy in Nigeria. It establishes a precedent for the taxation of services provided through digital platforms, even when the platform itself does not directly provide those services. This ruling reinforces the FIRS’s authority to broaden the scope of VAT collection to encompass the rapidly expanding digital marketplace. It is likely to influence future tax policies and regulations concerning digital platforms and potentially impact the pricing strategies of these platforms. The case highlights the evolving legal landscape surrounding taxation in the digital age and the challenges in applying existing tax laws to new business models.
