VAT revenue increased by 21.34% in third quarter of 2023
The National Bureau of Statistics (NBS) recently released a Value Added Tax (VAT) report, which states that in the third quarter of 2023 (Q3 2023), revenue from VAT increased to N980.07 billion.
This represents an increase of 51.60% year over year from N625.39 billion recorded in Q3 2022 and a 21.34% quarter over quarter increase from N781.35 billion recorded in Q2 2023.
Broken down by source, the amounts for local payments, import VAT, foreign VAT payments, and foreign VAT were N204.58 billion, N221.41 billion, and N522.08 billion, in that order.
When broken down by industry, manufacturing contributed the most (26.51%), suggesting that taxing manufactured goods in the nation is comparatively simple. Subsequently, Financial and Insurance activities contribute 12.31%, and Information and Communication contributes 19.04%.
Since the growth in VAT revenue is nearly twice as fast as the rate of inflation, there may be a real increase in VAT.
Furthermore, a rise in economic activity and an improvement in VAT collection are implied by the 51.6% year-over-year growth in VAT. It is imperative that the government maintains this notable rise in VAT revenue in order to raise enough money to cover expanding expenses without having to take on substantial public borrowing.
The limited VAT base, which lowers the quantity of taxable transactions and the amount of VAT collected, continues to be a problem for the nation. Certain taxpayers are also able to leak information and evade paying VAT due to the ineffective and dishonest collection and remittance system.
Digital and automated platforms, along with more robust accountability and oversight mechanisms, should be put in place to close these loopholes. As a result, there will be less room for VAT evasion and leakage.
