Nigeria generated N1.19 trillion from Value Added Tax (VAT) in the first half of the year (H1’22), according to data published by the Nigerian Bureau of Statistics (NBS).
The generated revenue represents a 19% year-on-year (YoY) rise when compared to N1 trillion earned during the same period in 2021. This was led by local payments, which recorded N703.16 billion, representing a 70.5% YoY rise from N412.28 billion in H1’21.
According to the data, foreign VAT payment contributed N229.11 billion, down YoY by 39.6% from N379.33 billion in H1’21. The NBS said on a quarterly basis, VAT rose by 1.96% to N600.15 billion in Q2’22 from N588.59 billion in Q1’22.
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On the aggregate, VAT for Q2? 22 was reported at N600.15 billion, showing a growth rate of 1.96 percent on a quarter-on-quarter (QoQ) basis from N588.59 billion in Q1’22.
“Local payments recorded were N359.12 billion, while Foreign VAT Payment contributed N111.13 billion in Q2’22.
“On a QoQ basis, Electricity, gas, steam and air conditioning supply recorded the highest growth rate with 116.47 per cent, followed by Accommodation and food service activities with 42.44 percent.
“On the other hand, Activities of extraterritorial organizations and bodies had the lowest growth rate with –42.39 per cent, followed by activities of households as employers, undifferentiated goods- and services-producing activities of households for own use with –36.57 percent .
“In terms of sectoral contributions, the top three largest shares in Q2’22 were Manufacturing with 33.08 percent; Information and communication with 18.9 percent; and Mining & quarrying with 10.6 percent.
“Conversely, activities of households as employers, undifferentiated goods- and services-producing activities of households for own use recorded the least share with 0.03 percent, followed by Activities of extraterritorial organizations and bodies with 0.05 percent; and Water supply, sewerage, waste management and remediation activities with 0.13 percent .
“However, on a YoY basis, VAT collections in Q2’22 increased by 17.16 percent from Q2’21,” the NBS said.
Nigeria began collecting 7.5% VAT on goods and services following the signing of the amended 2019 Finance Bill into law in 2020 by President Buhari. Since then, the largest African economy has recorded an increase YoY in revenues generated through VAT.
The N1.19 trillion generated in the first half of the year represents a much needed increase from non-oil revenue. As Nigeria grapples with the effects of insufficient oil revenue, the government has taken to borrowing to upset its growing bills.
But as an alternative to borrowing, the government has been expanding its tax regime to upset the revenue shortfalls from oil. Tax measures like stamp duty have been implemented in many sectors of the economy, amidst dwindling remittances by Nigerian revenue generating agencies.