Justice Akintayo Aluko of the Federal High Court in Lagos has delivered a decisive ruling affirming the power of the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT) on services rendered through ride-hailing and delivery platforms like Bolt. This ruling represents a significant legal endorsement of the FIRS’ tax collection efforts in Nigeria’s expanding digital service sector.
In a judgment delivered on Thursday, Justice Aluko dismissed an appeal filed by Bolt’s Nigerian operators, who had challenged the decision of the Tax Appeal Tribunal (TAT). The Tribunal had earlier ruled that the FIRS was right to demand VAT on services provided through digital platforms in the transport and food delivery sectors. Bolt’s attempt to overturn that ruling failed, with the court standing firmly by the Tribunal’s earlier verdict.
“There is no valid reason to disturb the judgment of the Tribunal,” Justice Aluko stated. “The Respondent acted within the law in appointing the Appellant pursuant to Section 10(3) of the VAT Act. Consequently, the judgment of the Tribunal delivered on May 26, 2023, is affirmed.”
In addition to upholding the legality of VAT collection by the FIRS, the court awarded N1 million in costs against Bolt’s operators. This further underlined the court’s stance on the matter and served as a warning to other operators who may consider ignoring tax obligations under Nigeria’s VAT law.
The FIRS, relying on Section 10 of the VAT Act, had earlier designated ride-hailing companies as agents responsible for collecting and remitting VAT on behalf of the government. This provision empowers the agency to appoint any person or company carrying out business in Nigeria to collect VAT where the supplier of the service is not physically present. In this case, FIRS held that ride-hailing operators, acting as intermediaries between drivers and riders, fall within that scope.
The legal dispute centered on whether ride-hailing services such as Bolt and its delivery arms should be liable for VAT, considering their role as platforms and not direct service providers. Bolt argued that it merely facilitates transactions between riders and drivers or food vendors and customers, and should not be liable for VAT remittance. However, the court did not accept this view, stating that the platform benefits commercially from the services rendered, and thus cannot be excluded from VAT obligations.
This ruling now sets a strong precedent. It gives the FIRS a firmer legal footing to enforce VAT compliance across Nigeria’s booming digital economy. E-commerce platforms, food delivery services, and logistics providers operating digitally must now take this judgment seriously and ensure that they are compliant with existing tax laws.
Beyond the immediate implications for Bolt and similar platforms, the judgment signals the government’s broader intent to tighten regulatory oversight of technology-driven businesses. As the digital economy continues to grow rapidly, regulators are moving swiftly to ensure it contributes meaningfully to national revenue.
For consumers, this could eventually lead to a modest increase in service prices, as companies adjust pricing structures to accommodate VAT compliance. Nonetheless, the court’s ruling reinforces the principle that every business operating in Nigeria, regardless of its digital nature, must comply with tax laws.
The FIRS has welcomed the ruling, stating that it reflects a shared understanding of the law and strengthens its mandate. Industry watchers now expect similar cases involving other digital platforms to emerge, especially as Nigeria continues to modernise its tax system in line with global trends.
