The federal government of Nigeria has reported a significant increase in Value Added Tax (VAT) revenue in the second quarter of 2024. According to data released by the National Bureau of Statistics (NBS), the government generated a total of N1.56 trillion from VAT during the period, representing a 9.11% rise compared to the N1.43 trillion collected in the first quarter.
Breakdown of VAT Collections
The NBS report further revealed that local payments accounted for N792.58 billion of the total VAT revenue, while foreign VAT payments amounted to N395.74 billion. Additionally, import VAT contributed N372.95 billion to the government’s coffers.
Sectoral Performance
When analyzed by sector, the report showed that human health and social work activities experienced the most significant growth in VAT revenue, with a quarter-on-quarter increase of 98.44%. Agriculture, forestry, and fishing followed closely with a 70.26% rise, while water supply, sewerage, waste management, and remediation activities recorded a growth rate of 59.75%.
On the other hand, activities of households as employers, undifferentiated goods and services producing activities of households for own use, and real estate activities witnessed the lowest growth rates during the quarter.
Sectoral Contributions
In terms of sectoral contributions to the overall VAT revenue, manufacturing emerged as the top contributor, accounting for 11.78% of the total. Information and communication followed with a share of 9.02%, while mining and quarrying contributed 8.79%.
However, activities of households as employers, undifferentiated goods- and services-producing activities of households for own use recorded the least share, with 0.00% each. Activities of extraterritorial organizations and bodies contributed 0.01%, while water supply, sewerage, waste management, and remediation activities, along with real estate services, each accounted for 0.04%.
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Year-on-Year Growth
When comparing VAT collections in Q2 2024 to the same period in 2023, the government recorded a substantial increase of 99.82%. This significant growth highlights the positive trajectory of VAT revenue generation in Nigeria.
If You Ask Me: Implications and Outlook
The increase in VAT revenue is a positive development for the Nigerian government, as it provides a crucial source of funding for essential public services and infrastructure projects. However, it is important to note that the growth in VAT collections may be influenced by various factors, including economic recovery, increased consumption, and government policies.
As the country continues to navigate economic challenges, the government will need to monitor VAT revenue trends closely and implement measures to ensure its sustainability. Additionally, efforts to enhance tax compliance and expand the tax base will be crucial in maximizing VAT revenue potential.
