The National Bureau of Statistics has released a report showing that Nigeria’s top three sources of VAT revenues are manufacturing, information and telecommunications technology, and mining and quarrying.
The other major sources of VAT revenue for the government are financial services, wholesale and retail, public administration, and defense. A study by FBNquest shows that when comparing year-to-year, the increase in VAT receipts was more noticeable in these three sectors, rising by an astounding 88% over the prior year.
The successive increase in VAT was driven by higher VAT collections across all revenue sources.
Analysis of VAT Growth
The Nigerian government received a total of N922.9 billion in VAT in Q3 2024, in contrast to the NGN792.6 billion collected in the previous quarter. The total revenue from domestic (non-import) VAT is 52%.
Import and foreign (non-import) VAT, which account for roughly 25% and 23% of overall VAT receipts, respectively, grew by 10% and 13% on a quarterly basis to NGN410 billion and NGN448.9 billion. The manufacturing sector was the biggest contributor to the sectoral VAT contribution with VAT revenues of about NGN205 billion.
With an estimated NGN192.8 billion in income for the quarter in focus (Q3 2024), the information and communication technology (ICT) industry came in second in terms of overall VAT revenue.
The other industries that contribute the most VAT revenue are mining and quarrying, public administration, and defense, with respective contributions of NGN174.4 billion and NGN95.9 billion.
Notwithstanding the increase in VAT collection, Nigeria’s revenue-to-GDP ratio has remained low, ranging between 7% and 9%, as compared to other emerging and developing nations.
9am News Nigeria recounts that the present administration of President Bola Tinubu intends to implement a number of tax reforms in order to boost VAT collection, expand the tax base, and lower tax expenditures. It is anticipated that the execution of these programs will raise fiscal revenues and improve the poor revenue-to-GDP ratio of the nation. Additionally, the report indicates that Nigeria’s gross VAT receipts in Q3 of 2024 climbed by 14% on a quarterly basis to N1.8 trillion.
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