New Telegraph

‘FG’s measures to increase non-oil revenue boost VAT collections’

Analysts at FBNQuest have attributed the improved Value Added Tax (VAT) collections in Q4’22 to the various initiatives introduced by the Federal Government aimed at raising revenue from non-oil sources. The analysts stated this while commenting on the latest quarterly report on VAT published by the National Bureau of Statistics (NBS). Noting that the report shows that the federation’s gross collections from VAT increased by 12 per cent q/q and 24 per cent y/y to N697.4billion in Q4’22, the analysts stated that on an aggregate basis, gross VAT collections totalled N2.5trn in 2022, thus implying an increase of 21 per cent y/y compared with N2.1 trillion realised in 2021.

They also noted that domestic VAT collection was the highest source of revenue and accounted for about 59 per cent of total VAT collections during the quarter as it generated over N408 billion in Q4’22, representing an increase of 22 per cent y/y and 11 per cent q/q. Further commenting on the report, the analysts observed that nonimport (foreign) VAT and import VAT collections by the Nigerian Customs Service (NCS) were the second and third largest sources of revenue, accounting for 23 per cent and 19 per cent of total VAT collections respectively. According to the analysts, both VAT sources generated over N159 billion and N129 billion during the period.

Specifically, they stated: “Amongst the sectors, manufacturing topped the list with total VAT collection of over N131 billion, and contributed about 32 per cent and c.19 per cent of domestic VAT and total VAT collections respectively. In addition, the analysts noted that VAT revenue from the manufacturing sector grew by +15 per cent q/q, much better than the -4 per cent q/q in the previous quarter and pointed out that the sector’s Gross Domestic Product (GDP) delivered a growth rate of 2.8 per cent y/y in Q4’22, rebounding from a -1.9 per cent contraction in Q3’22. They also pointed out that the Information and Communication sector was the second largest contributor to VAT revenue, generating over N73 billion in revenue and accounting for 18 per cent and 11 per cent of domestic and total VAT collections respectively, while the Public administration and defence came in third at around c.6 per cent, or c.10 per cent on a sector wide basis with revenue amounting to N40 billion in Q4’22.

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