Revenue from Value Added Tax Rose by 1.75% in First Quarter of 2023
According to a National Bureau of Statistics (NBS) study, Value Added Tax (VAT) increased by 1.75 percent from N697.38 billion in the fourth quarter of 2022 to N709.50 billion in the first quarter of 2023.
The recent growth in the contribution of VAT to the non-oil revenue and overall revenue can be linked to the prior government’s efforts to diversify revenue-based generation in response to a revenue shortage frequently created by the volatility of crude oil prices on the global oil market. In the quarter under review, the VATs from domestic payments, foreign payments, and import VAT totaled N436.10 billion, N151.13 billion, and N122.37 billion, respectively.
The household employment activities and household production of undifferentiated goods and services for personal use had the greatest growth rates, coming in at 349.86%, according to the VAT sectoral growths. Next, with a growth rate of 95.64 percent, comes construction.
The real estate sector experienced the second-worst growth rate, at -47.01 percent, and was followed by extraterritorial organizations and bodies, at -53.54 percent. The three industries that give the most to the VAT are manufacturing, information and communication, and mining and quarrying, with respective contributions of 29.65 percent, 19.29 percent, and 12.24 percent.
The activities of territorial organizations and bodies, however, made up the smallest portion of the VAT, contributing only about 0.02 percent. The activities of households that employed people, the undifferentiated goods and services that households utilized, and the production of water supply, sewage, waste management, and remediation by households—which each contributed between 0.03 and 0.04 percent—come next.
Additionally, in the first quarter of 2023, VAT climbed by 20.56 percent annually. The VAT hike is a positive trend. However, the incoming administration needs to place more of an emphasis on industries that have the potential to dramatically raise VAT and overall revenue, such as real estate and others.
