Tax Liability of Law Firms in Nigeria – Rethinking the Status Quo


Ignorance of the law they say is no excuse when one is found culpable of committing a crime, but it is an axiomatic fact that many lawyers are ignorant of the fact that the law expects them to remit Value Added Tax paid in by their clients to the government in the course of plying their trade as lawyers.

However, what is of interest here is the question whether law practice should not fall among the classes of professions/occupations of those exempted from paying Value Added Tax (VAT). Medical practitioners do not collect and remit VAT because they are deemed to render essential services.

Interestingly, it is a well known fact that medical practitioners make more money than lawyers (at least on the average). This position is being asserted without being unmindful of the fact that it is the consumer of a product that pays VAT, and in which case it is the duty of the professional to collect the VAT and remit it to the government. In reality however, most Nigerians do not pay VAT thereby forcing the professional whose duty it is to remit VAT to deduct VAT due from the money paid him/her and remit same to the government. However, if medical services are not VATable, why should law practice be VATable?

The human society cannot exist in the absence of law and order. Even those in the medical field cannot function if there is no law and order which is the main business of law practice, together with that of security agencies. Lawyers render pro bono services, they take up public interest suits, they challenge anomalies going on in the society and they draft legal documents that will ensure that citizens transact with one another within the ambit of civility! Why then should the citizens pay VAT for seeking legal services? Have we forgotten that the law exists for the protection of the low and the mighty? Is there no possibility that indigent citizens can be deterred from seeking legal services because of the extra expenses to be incurred paying VAT? Do citizens of other commonwealth jurisdictions pay VAT for seeking legal services?

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It’s high time the VAT Act is amended to exclude law profession among the VATable professions.

Culled from The National Bar Territory

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