FG Realises N651.8bn Value Added tax in H1 2020

The Federal Government generated a total sum of N651.77 billion from Value Added Tax (VAT) in the first half of 2020, according to a recent report from the National Bureau of Statistics (NBS).

This represents 8.45 percent year-on-year increase from N600.98 billion realised in the same period of 2019.

A break down of the report showed professional services generated the most VAT during the period under review, it generated N95.92 billion. This was followed by the manufacturing sector with N67.63 billion.

Commercial and Trading added N31.10 billion while the Mining industry, Textile and Garment Industry and Pharmaceutical, Soaps and Toiletries contributed N127.58 million, N499.19 million and N648.78 million, respectively.

Further analysis revealed that N335.82 billion of the total amount generated during the period under review was realised as Non-Import VAT locally, while N161.74 was generated as Non-import VAT for foreign.

The remaining amount of N154.21 billion was realised as NCS-Import VAT.

Nigeria’s revenue generation remains one of the nation’s main challenges. Recent data showed Nigeria’s debt service to revenue ratio stood at 99 percent as of June 2020, suggesting that all the nation’s current revenue goes towards debt servicing.

A situation the International Monetary Fund (IMF) and other global agencies have described as alarming and blamed for the nation’s poor infrastructure growth.

The International Monetary Fund recently said Nigeria must improve its tax collection efficiency to broaden growth while simultaneously paying and servicing its debts.

While Nigeria’s debt to GDP ratio is one of the lowest in the world, poor tax collection structure has crippled development and render the nation a mono-product economy.

The country mainly depends on crude oil revenue to service both debts and grow its declining economy. This, experts expect to hurt the nation during a period like this.