Nigeria has recorded a 45.02% increase in its Value Added Tax (VAT) collections, amassing a total of N3.64 trillion in 2023, according to data from the National Bureau of Statistics (NBS).
This considerable growth, up from N2.51 trillion collected in 2022, underscores the country’s strengthening economic landscape amidst various reforms and measures aimed at enhancing tax compliance and broadening the tax base.
A breakdown of the 2023 VAT revenue reveals a comprehensive contribution from different segments, including local non-import VAT, which accounted for N2.10 trillion, non-import (foreign) VAT at N824.60 billion, and NCS (Nigeria Customs Service)-import VAT tallying up to N714.51 billion. This diversified revenue source underscores Nigeria’s multifaceted economic activities and the government’s efforts to harness these sectors for national development.
Top Three Highest Paying Sectors
- The manufacturing sector emerged as the highest VAT contributor with a staggering N578.4 billion, marking a 21% increase from its previous year’s contribution of N477.43 billion. Despite this achievement, the sector faces challenges such as widespread smuggling, which not only undermines legitimate businesses but also significantly dents the government’s revenue collection.
- Following closely, the Information and Communication sector boasted a VAT contribution of N412.3 billion, witnessing a 53% surge from the N268.84 billion recorded in 2022. The sector’s growth, however, is somewhat throttled by limited broadband penetration, especially in rural areas, affecting the full realisation of its potential and broader access to ICT.
- The Mining and Quarrying sector also saw remarkable growth, with its VAT contribution jumping 64% to N260.0 billion from N158.49 billion in the previous year. The sector’s sustainability and growth are contingent upon addressing the pervasive issue of illegal mining, which results in significant revenue loss and environmental degradation.
Top Three Lowest Paying Sectors
- On the flip side, the sectors with the least VAT contributions include activities of households as employers and undifferentiated goods- and services-producing activities of households for own use, which slightly grew by 11% to N367.93 million in 2023 from N332.70 million in 2022.
- The water supply, sewerage, waste management, and remediation activities sector experienced a decline, posting a -31% annual growth with a VAT collection of N1.11 billion in 2023, down from N1.60 billion in 2022.
- Meanwhile, activities of extraterritorial organisations and bodies saw a significant 44% growth, with VAT collections rising to N1.27 billion in 2023 from N882.97 million in the previous year, reflecting the sector’s gradual but positive trajectory in its financial contributions.
