Nigeria generates N327.2bn from VAT in three months

Nigeria generated N327.1bn revenue from Value Added Tax in the second quarter of 2020, up by 0.81 per cent when compared to N324.58bn in the first quarter.

According to the National Bureau of Statistics, despite VAT remittance growing by 0.81 per cent in Q2, critical sectors of the economy such as manufacturing, hotel catering, trading, transport, oil and construction recorded significant declines in VAT remittances during the period.

Overall, 21 of the 28 sectors recorded declines in VAT remittances in Q2, a significant decline which may be largely attributed to the Coronavirus-induced lockdown across the country during the period.

In Q2, the biggest decline in VAT remittance was from hotel and catering, with a 45.5 per cent drop from N2.52bn received in Q1 to N1.36bn at the end of Q2.

Also, the manufacturing sector recorded 19 per cent decline from N37.3bn in Q1 to N30.2bn. Expectedly, VAT earning from oil marketing plugged 18.8 per cent, while oil production dropped by 7.4 per cent.

Other critical sectors that recorded declines in VAT earnings in Q2 include automobiles (-30 per cent), breweries (-27.3 per cent), construction (22.9 per cent), commercial and trading (-19 per cent), agriculture and plantation (-14.8 per cent).

Meanwhile, despite significant decline across critical sectors, pioneering largely drove the increase in VAT. In Q2, Nigeria received 643.7 per cent boost in pioneer VAT remittances, from N868.8m in Q1 to N6.46bn in Q2. This represents the biggest growth in VAT remittances across all sectors in the period.

The decline in VAT across some key sectors of the economy implies that uncertainty still surrounds the effective implementation of the 2020 budget.

Recall that in the 2019 budget, Nigeria projected VAT earning of N1.7tn as it anticipated higher tax revenues from ‘vatable’ goods and services.

However, VAT collected during the year was N1.188tn compared to a budget of N1.703tn, representing a negative variance of N515bn or 30 per cent.

In the 2020 revised budget, Nigeria once again estimated total VAT revenue of N2.03tn. However, in H1 2020, the total VAT generated was estimated at N651.7bn, representing 32.1 per cent of target.

Get in Touch

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Related Articles