Key Highlights
- N269.79bn was generated as VAT in Q1 2018 as against N254.10bn generated in Q4 2017 and N196.70bn in Q1 2017.
- There was a recorded 6.17% increase from the last quarter of Q4 2017.
- Manufacturing generated the highest VAT revenue at N30.14bn.
- Mining generated the least amount at N46.25 million.
The National Bureau of Statistics (NBS) has released the sectoral distribution of Value Added Tax (VAT) for the first quarter ended March 2018.
Sectoral distribution of Value Added Tax (VAT) data for Q1 2018 showed that the sum of N269.79bn was generated as VAT in the first quarter of 2018 as against N254.10bn generated in the last quarter of Q4 2017 and N221.38bn in the first quarter of 2017.
Meanwhile, this report from the NBS shows that this upward movement in VAT represents 6.17% increase Quarter-on-Quarter, and 21.87% increase Year-on-Year.
According to the report, manufacturing generated the highest amount of VAT with N30.14bn and it was closely followed by Professional Services and Commercial and Trading; both generating N16.58bn and N14.93bn respectively.
However, Mining generated the least and was closely followed by Pharmaceutical, Soaps & Toiletries and Textile & Garment industries with N46.25 mln, N243.44 mln and N285.43 mln generated respectively.
Of the total amounted generated in Q1 2018, N121.40bn was generated as Non-Import VAT locally while N98.40bn was generated as Non-Import VAT for foreign. The balance of N50.00bn was generated as NCS-Import VAT.
Reasons for Increment
Since Manufacturing is the biggest contributor to VAT during the quarter, the increase can mainly be attributed to the increase in manufacturing activities.
Who benefits?
The increase in VAT will grow Government revenue base, which could in turn be invested in infrastructure, other developmental projects, etc.; thereby, stimulating the nation’s economic growth.
The rise in VAT is a welcome development to the Nigerian government in their bid to diversify the economy and widen their revenue base.
Who loses?
With the rising VAT generation, companies that bear the burden of the tax withouting being able to pass the burden of VAT on their consumers might experience a decline in their profits.
Is it Sustainable?
Since VAT has been rising consecutively since the fourth quarter of 2015, the increase is therefore sustainable and cannot be said to be seasonal.
