VAT rises 17.8% in one year, declines marginally in Q3 2021

Revenue accruals from Value Adde Tax (VAT) rose 17.8 per cent or N550.49 billion in the third quarter of 2021 from the N424.7 billion recorded in the same period of 2020.

But the value fell 2.3 per cent short of the N512.25 billion realized between April and June in 2021.

This is contained in the recently released VAT report, by the National Bureau of Statistics (NBS).

It is worth noting that a total of N1.51 trillion has been generated from VAT between January and September 2021.

This is 40.2 per cent  higher than N1.08 trillion recorded in the corresponding period of 2020 and 72.3 per cent  higher than N876.1 billion generated in similar period in 2019.

In the third quarter of 2021, the manufacturing activity; Information and Communication activity; and Mining & Quarrying activity accounted for the top three largest share of total revenue collected sector-wise, representing 30.87 per cent (N91.2 billion), 20.05 per cent (N59.3 billion), and 9.62 per cent (N28.4 billion) respectively.

In the period under review, collections of Non-Import VAT local and NCS-Import VAT were higher compared to the previous quarter (second quarter of 2021).

Nigeria continues to ramp up efforts to increase non-oil revenue by increasing its tax collection rates, which has recorded significant growth since the federal government increased VAT rate from five per cent to 7.5 per cent in the 2019 Finance Act, which was signed by the president and effective 13th January 2020.

It has become imperative for the federal government to diversify its revenue bucket, given the recent uncertainties surrounding crude oil revenue, which has been affected by high volatility in price, cut in production quota and recently inability to meet production target.

Notably, oil price which had rallied above $80 per barrels as a result of the OPEC+ strategy to tighten supply has now dipped significantly below $70 per barrel, due to the fear posed by the new Omicron covid variant.

The manufacturing sector accounted for the highest VAT collections in the period under review with N91.2 billion, representing 30.9 per cent of the total non-import sectoral VAT collections.

Information and Communication sector is a distant second with N59.25 billion VAT, which is 20.1 per cent of the total.

Mining and quarrying sector recorded N24.44 billion VAT, followed by public administration and financial sector with N27.2 billion and N23.9 billion respectively.

On the flip side, activities of extraterritorial organizations, households as employers and water supply sector, recorded the least VAT collections in Q3 2021 with N20.16 million, N90.8 million, and N236.8 million respectively.