Nigeria’s value-added tax (VAT) collection increased from N327.2 billion recorded in Q2 2020 to N424.71 billion in Q3 2020, as other manufacturing sector led the pack with N47.07 billion remittance.
This was disclosed by the National Bureau of Statistics (NBS) in its Sectoral Distribution of Value Added Tax Q3 2020 report released on Monday.
VAT Collections in the quarter indicates a 29.8% increase as against N327.2 billion recorded in the previous quarter and 54.37% increase compared to N275.12 billion generated in the corresponding quarter of 2019.
- Other manufacturing, generated the highest amount of VAT with N47.07 billion and closely followed by Professional Services, which generated a sum of N44.01 billion.
- Commercial and Trading generated N21.18 billion while Mining, Textile and Garment industry generated the least with N63.5 million and N346.27 million respectively.
- Out of the total amount generated in Q3 2020, N214.66 billion was collected locally as Non-Import VAT while N115.34 billion was collected as Non-Import VAT for foreign.
- The balance of N94.70billion was generated as NCS-Import VAT.
- Out of the 28 sectors, 24 of them recorded improved VAT remittances during the period, compared to Q2 2020 while 4 of them recorded decline.
The N424.7 billion generated in Q3 2020, brings the total VAT collections year-to-date to N1.08 trillion, which is 22.87% higher than N876.1 billion generated as at the same period in 2019.
Reasons for Increment
Since manufacturing sector is the biggest contributor to VAT during the quarter, the increase can mainly be attributed to the increase in manufacturing activities.
However, it is worth noting that offshore operations recorded the highest growth of 193% in VAT remittances during the period.
The increase in VAT will grow government revenue base especially in a time when oil revenue is dwindling, this could in turn be invested in infrastructure, other developmental projects, etc.; thereby, stimulating the nation’s economic growth.
The rise in value added tax is a welcome development to the Nigerian government in their bid to diversify the economy and widen their revenue base from a fiscal point of view.