The Minister of Finance, Mrs Kemi Adeosun remarked that 87% of Nigeria’s VAT comes from four states and Federal Capital Territory (FCT) while only 13% comes from 32 other states in the federation.

The Minister, while speaking at the parley between the federal government and progressive governors forum (PGF) on Tuesday stated that Lagos has the highest VAT collection, amounting to 55% of Nigeria’s VAT.

According to her, FCT has the second place with 20%, while 6 % in Rivers, 5% in Kano and 1% in Kaduna.

As reported by TheCable, she also reiterated the need to increase tax compliance rate in the country which according to her is very low.

There is no poor country that has a high tax compliance rate, and no rich country that has a low one, Adeosun said.

Expressing her hope and expectation, the minister said she looks forward to a Nigeria where Internally Generated Revenue by state would serve them such that the Finance Commissioners will no longer need to visit Abuja monthly to share FAAC.

Federal Account Allocation Committee (FAAC)

Speaking of FAAC, recall that a total sum of N462.36 billion was disbursed in June summing up the total amount disbursed by the Federal Account Allocation Committee (FAAC) to the Federal, State and Local Government in the first half of 2017 to N2.79 trillion, according to National Bureau of Statistics (NBS).

Similarly, as noted in the June report, the FAAC disbursed the sum of N462.36 billion to the three tiers of government in June 2017 from the revenue generated in May 2017.

Out of this amount, N79.99 billion came in from Valued Added Tax (VAT), which is 17.3 % of the total sum.

The sum of N204.77bn was generated as VAT in Q1 2017 as against N207.35bn generated in Q4 2016 and N186.43billion in Q1 2016 representing 1.25% decrease Quarter-on-Quarter and 9.84% increase Year-on-Year.

It noted that other manufacturing generated the highest amount of VAT with N28.73bn generated and closely followed by Professional Services and Commercial & Trading, both generating N20.82bn and N12.89 billion respectively.

Mining generated the least and closely followed by Local Government Councils and Textile and Garment industry with N35.07 million, N99.84 million, and N230.89 million generated

However, out of the total amounted generated in Q1 2017, N126.64bn was generated as Non-Import VAT locally while N31.72bn was generated as Non-Import VAT for foreign. The balance of N46.41bn was generated as NCS-Import VAT.

The Minister had in her previous remarks lamented on Nigeria’s low tax-to-GDP ratio, which she said was at 6 %, stating it to be one of the lowest in the world.

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