The Centre for the Study of Economies of Africa (CSEA) has described the increasing Value Added Tax (VAT) collections by the Federal Government in recent quarters as a welcomed development in the drive to boost non-oil revenue, stressing, however, that there is the need to improve tax administration structure for improved VAT collection.
The research firm gave the charge in its just published ‘Nigeria Economic Update’ No 133 Issue sourced on Wednesday by our correspondent.
In addition to strengthening the tax administration structure, analysts in the economics research firm, also canvassed the sustenance of the government’s anti-graft policies to curb leakages in the tax system.
Using the recent statistical data on VAT collections produced by the National Bureau of Statistics (NBS) to justify its recommendations, the CSEA submitted that even with the rising VAT accruals there abounded great potentials for increased mobilisation of financial resources through VAT as the nation’s economy sustains its recovery trend.
For instance, it noted that the volume of Value-Added Tax (VAT) had risen from N496.39 billion to N512.25 billion between Q1 and Q2 2021, reflecting a 3.2 percent growth and the highest ever quarterly VAT amount generated, reflecting a year-on-year (Y-o-Y) 56.56 percent growth.
The research firm further clarified: “VAT collections have continued to peak, following the increase in VAT rate from 5 percent to 7.5 percent in January 2020 by the federal government. In Q2 2021, the manufacturing sector and professional services sector accounted for 8.76 percent and 5.72 percent of VAT collections with a sum of N44.89 billion and N29.3 billion respectively.
“Further disaggregation shows that N187.43 billion was generated as non-import local VAT and N207.69 billion was generated from non-import foreign VAT. Meanwhile, the balance of N117.13 billion was generated from the Nigerian Custom Service import VAT.
“In light of the economic recovery, there are potentials for increased mobilisation of financial resources through VAT. This will improve the government’s fiscal space and provide funding for critical sectors of the economy such as infrastructure, health and education. It therefore becomes necessary that the government improve its tax administration structure and strengthen its anti-corruption policies to avoid tax evasion”, the CSEA added.
