Nigeria’s VAT Revenue Increases in Q4 2021 – CSEA AFRICA

Data from the National Bureau of Statistics (NBS) show that the total Value Added Tax (VAT) revenue collected in Q4 2021 was N563.72 billion, about 27 percent of the N2.07 trillion collected in 2021.

VAT collection in Q4 2021 is 12.63 percent higher than N500.49 billion collected in Q3 2021 and 24 percent higher than N454.69 billion collected in the same quarter in 2020. The disaggregated data shows that local non-import VAT contributes about 59.1 percent of total VAT, followed by NCS import VAT with 22.5 percent and foreign non-import VAT with 18.4 percent.

Manufacturing contributed the highest to local non-import VAT at the sector level with 30.9 percent, followed by information and communication with 9.9 percent. The federal government increased the VAT rate by 2.5 percent points in 2020 from 5 percent to 7.5 percent.

The quarter-on-quarter increase in VAT collection shows that the increment is partly attributable to the increased economic activity, although the VAT rate increase might be contributory. The gross domestic product grew by about 3.98 percent in the same period.

The increment of VAT collection is a positive development as the government has more revenues for its growing expenditure. An increase in VAT collection reduces government reliance on oil revenue and minimises the impacts of oil market shocks. Given the size of our economy, VAT collection is still low.

The government could expand tax collection by reducing tax evasion through regular audits of firms’ sales records and strengthening the digital taxation system.

SOURCE: CSEA AFRICA