Data on Value Added Tax (VAT) released by the National Bureau of Statistics (NBS) yesterday shows that the Federal government generated N600.2 billion in VAT in the second quarter of 2022.
The Q2 figure represents a 1.96% increase compared to the previous quarter and a 17.16% growth rate compared to the corresponding quarter of 2021. However, 10 out of the 21 local sectors examined in the report saw a reduction in their contribution.
VAT is tax paid on the consumption of goods and services rendered. The current VAT rate in Nigeria is 7.5%.
Quarterly, the NBS publishes government revenue from VAT and in the quarter total revenue generated stood at N600.2 billion against N588.6 billion in Q1 of 2022, a positive growth rate of 1.96%.
Comparing quarterly growth rates from Q1 2021 to Q2 2022, the growth rate in Q2 2022 is the lowest. The highest quarterly growth rate was recorded in Q4 2021, after a 2.30% decline witnessed in Q3 2021.
A further analysis of the N600.2 billion generated in Q2 2022 shows that Non-Import VAT (local) contributed the highest share — 59.8%. While Nigeria Customs Service Import VAT and Non-Import (foreign) contributed 21.6% and 18.5%, respectively.
However, that of Non-Import (foreign) dropped by 5.81%.
Service (NCS) import in Q2 increased by 4.38% and 2.63%.
A sectoral contribution analysis places VAT remittance from the manufacturing sector as the highest. The total VAT collected from the sector in Q2 was N118.8 billion, the highest since Q1 2021. Information and Communication had the second-highest total amount of remittance at N68.18 billion.
Mining and quarrying, public administration and defense, financial and insurance activities are also among the top 5 sectors that remitted the highest VAT in Q2. However, compared to their remittance in Q1, the remittance from mining and quarrying as well as finance and insurance activities decreased by 6.61% and 23.67%, respectively.
Although VAT income as a whole increased in Q2, this was the slowest growth rate recorded since Q1 of the previous year. Dataphyte had identified in an earlier report constraints to VAT optimization in Nigeria and the continued fall in growth after Q4 2021 only calls for quicker actions on the part of government.