The Nigerian government raked in the sum of N1.78 trillion from Value Added Tax (VAT) in the third quarter of 2024.
The National Bureau of Statistics (NBS) disclosed this in its latest VAT report.
The Q3 VAT figure represents a 14.16% quarter-on-quarter increase compared to the N1.56 trillion collected in Q2 2024 and an 88% year-on-year growth from Q3 2023.
Breakdown of VAT contributions
The N1.78 trillion VAT revenue was driven by contributions from three key streams:
Local VAT Payments: N922.87 billion.
Foreign VAT Payments: N448.85 billion.
Import VAT: N410.62 billion.
Human health and social work activities led the pack with the highest growth rate of 250.39% quarter-on-quarter, followed by activities of households as employers and undifferentiated goods and services-producing activities for household use, which grew by 102.09%.
Conversely, some sectors recorded significant declines. These include water supply, sewerage, waste management, and remediation activities, which fell by 41.92%, the sharpest decline among sectors.
Activities of extraterritorial organizations and bodies also dropped by 36.14%.
Sectoral contributions
In terms of contributions to the overall VAT pool, the top-performing sectors in Q3 2024 were:
Manufacturing: 22.21%
Information and Communication: 20.89%.
Mining and Quarrying Activities: 18.90%.
At the lower end of the spectrum were activities of households as employers and undifferentiated household activities, contributing 0.01%.
Activities of extraterritorial organizations and bodies, also contributed 0.01%, while water supply, sewerage, waste management, and remediation activities, contributed 0.03%.
The Q3 2024 VAT collections showed remarkable progress on a year-on-year basis, recording an 88% increase from Q3 2023.
This shows the government’s efforts to enhance revenue generation through tax administration and compliance.
What you should know
The VAT data comes amid ongoing debates over the new sharing formula for the revenue as proposed in the new tax reform bills currently before the National Assembly.
The new tax bills under consideration proposes adopting a derivation principle in the allocation of VAT revenues between the federal government and sub-national entities.
Under the current Section 40 of the VAT Act, VAT revenue is allocated as follows: 15% to the Federal Government, 50% to the States and Federal Capital Territory (FCT), and 35% to Local Governments.
The allocation to states and local governments incorporates a derivation principle of at least 20%. Although not explicitly detailed in the VAT Act, other factors influencing distribution include 50% based on equality and 30% based on population.
Additionally, 4% of collections are allocated to the Federal Inland Revenue Service (FIRS) as a collection fee, while 2% goes to the Nigeria Customs Service (NCS) for import VAT.
However, Governors of the 19 Northern states, along with traditional rulers and stakeholders from the region, have expressed opposition to the bill, particularly concerning the draft for VAT distribution based on derivation.
Most lawmakers from the Northern bloc have aligned with their position.
(Nairametrics)
