Nigeria’s VAT Revenue Hit A Record NGN 311.94 Bn In Q2 But The Country’s Taxman Is Not Out Of The Woods Just Yet
The latest report released by the National Bureau of Statistics (NBS) shows that Nigeria generated NGN 311.94 Bn revenue from Value-Added Tax (VAT) in the second quarter (Q2) of 2019, the highest in seven years.
According to the report, the VAT generated in Q2 2019 represents a 7.92 percent increase in VAT revenue when juxtaposed with the figure obtained Q1 2019. The new VAT figure of NGN 311.94 Bn also eclipsed the amount recorded during the same period last year; that’s Q2 2018 when a total of NGN 266.7 Bn was generated.
The breakdown of the data from the NBS shows that VAT generated rose by 16.95 percent in Q2 2019, on a year-on-year basis. The VAT generated was put at NGN 269.79 Bn in Q1, while it rose to NGN 311.94 Bn in Q2 2019.
Furthermore, out of the total amount generated in Q2 2019, NGN 151.56 Bn was generated as Non-Import VAT locally while NGN 94.90 Bn was generated as Non-Import VAT for foreign. The balance of NGN 65.48 Bn was generated as NCS-Import VAT.
On a sector-by-sector consideration, the highest contributions to the VAT were from manufacturing, professional services, and commercial trading with NGN 34.43 Bn, NGN 29.58 Bn, and NGN 16.27 Bn being respectively turned in as VAT from the aforementioned sectors. The NBS report also has it that manufacturing has been the biggest contributor to Nigeria’s VAT in many respects.
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Mining, on the other hand, generated the least and that sector is closely followed by Pharmaceutical, Soaps & Toiletries, and Textile and Garment Industry which respectively contributed NGN 50.60 Mn, NGN 250.09 Mn and N316.91 Mn to the revenue generated.
Considering growth numbers recorded between Q1 and Q2 2019, the biggest growth in VAT revenue have been posted by transportation and haulage services which have seen their VAT revenue grow by up to 205.35 percent.
Hotels and catering services also appear to be towing a similar line as those areas have also seen a 31.38 percent growth in VAT revenue during the same period. The third highest growth numbers are found in state ministries and parastatals, petrol-chemical companies and petroleum refineries.
Given that the Federal Inland Revenue Service (FIRS) recently announced its intention to impose VAT on all international and local online transactions effective from next year, these VAT numbers can be expected to rise even further.
But it’s not entirely a rosy picture for the country’s tax agency. Even as the FIRS recorded its biggest quarterly growth in VAT revenue in nearly a decade, it remains unclear if the agency will meet up with or fall short of the target for 2019.
Just recently, in a letter that was hugely circulated on social media, the Federal Government queried the Chairman of FIRS, Babatunde Fowler, over the shortfalls in tax revenues. The FG sought to know why tax revenue shortfalls widened and worsened between 2017 and 2018 even as the FIRS claimed to have made record tax collections in 2018.
However, the FIRS boss has since reverted, sparing his blushes by explaining that the dip recorded in tax in 2015 and 2016 happened because the Nigerian economy plunged downhill due to the global crash in world oil price.
