The National Bureau of Statistics (NBS) unveiled a comprehensive analysis on Friday, March 15, shedding light on the remarkable surge in Value Added Tax (VAT) collections alongside a noticeable decline in Company Income Tax (CIT) for the fourth quarter of 2023 (Q4 2023).
According to the detailed report titled “Value Added Tax (Q4 2023),” VAT collections exhibited a robust growth rate of 26.61%, rising from N948.07 billion in Q3 2023 to an impressive N1.20 trillion in Q4 2023. The report meticulously outlined the breakdown of VAT payments, with local contributions totaling N630.00 billion, Foreign VAT Payments standing at N326.27 billion, and import VAT making a significant contribution of N244.04 billion during the quarter.
Quarter-on-quarter analysis conducted by the Bureau highlighted substantial growth rates in specific sectors, with agriculture, mining, and quarrying sectors experiencing the most significant surge at 63.75%, closely followed by other services activities at 61.98%. Conversely, activities of extraterritorial organizations and bodies recorded the lowest growth rate at -19.44%, trailed by financial and insurance activities at -8.46%.
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In terms of sectoral contributions to VAT collections, the report delineated the top three sectors, with manufacturing leading the charge at 13.24%, followed by information and communication at 10.02%, and mining and quarrying at 7.91%. Conversely, undifferentiated goods- and services-producing activities of households for their own use recorded the least share at 0.00%.
The report also provided a comprehensive perspective on the year-on-year growth in VAT collections, revealing a staggering surge of 72.12% in Q4 2023 compared to the corresponding period in 2022.
In a parallel report titled “Company Income Tax Q3 2023,” the NBS illuminated a contrasting trend in CIT, indicating a decline of -35.40% on a quarter-on-quarter basis for Q4 2023. The aggregate CIT for the period was reported at N1.13 trillion, down from N1.75 trillion in Q3 2023. The report delved into the breakdown of CIT payments, with local contributions amounting to N533.93 billion and Foreign CIT Payment contributing N596.10 billion during the quarter.
Quarter-on-quarter growth rates across sectors varied significantly, with electricity, gas, steam, and air conditioning supply registering the highest growth rate at 79.65%, followed closely by construction at 57.86%. Conversely, activities of Information and Communication, and Public administration and defense, compulsory social security experienced the lowest growth rates.
In response to the shifting revenue dynamics, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, shared insights into the Nigerian government’s proactive measures to enhance revenue and economic growth.
Edun noted the adoption of a comprehensive restructuring of revenue streams, leveraging technology for seamless and efficient revenue collection processes, and automatic deductions from revenue-generating agencies and government-owned enterprises.
“We no longer wait for reconciliation with revenue-generating agencies and Government Owned Enterprises (GOEs) as was the practice in the past. Instead, we now deduct automatically from source to plug leakages,” he elaborated, outlining the government’s proactive approach.
The minister elaborated on the seamless and digital nature of revenue collection processes, ensuring that the federal government receives its dues promptly and efficiently, without the need for cumbersome reconciliation processes.
“Each day now, a federal government enterprise earns revenue, government checks, and immediately it takes it seamlessly, automatically, and digitally. So there is no issue of there may be a discussion later as to let us reconcile and so forth,” he said.