FG Rakes In N10tn VAT Under Buhari – NBS

Posted by Samson Kankan Business News, Latest Headlines Monday, March 20th, 2023

(AFRICAN EXAMINER) – The Federal Government has raked in N10.1tn from the collection of Value Added Tax under the regime of the President, Major General Muhammadu Buhari (retd.).

This comes against the backdrop of the advice by the Minister of Finance, Zainab Ahmed, that the incoming government should increase the VAT from the current 7.5 per cent to 10 percent.

VAT is a 7.5 per cent consumption tax administered by the Federal Inland Revenue Service when goods are purchased and services are rendered, and it is borne by the final consumer.

Revenue generated from VAT is usually disbursed to the three tiers of government through the Federation Accounts Allocation Committee.

An analysis of reports obtained from the National Bureau of Statistics showed that the VAT earnings continued to rise annually throughout the eight-year period.

The country earned N759.4bn in 2015, N777.5bn in 2016, N972.4bn in 2017 and N1.1tn in 2018.

VAT collections in 2019 amounted to N1.2tn, N1.5tn in 2020, N2.1tn in 2021 while N2.5tn was paid in 2022.

The significant increase in VAT collection in the past two years is not unconnected with the decision by the Federal Government in 2020 to increase the VAT rate from five per cent to 7.5 per cent. This was part of the tax reforms included in the 2019 Finance Act meant to help the government achieve its revenue projections.

Meanwhile, economists have cautioned against raising the VAT from 7.5 per cent to 10 per cent by the incoming administration, as they argued that it would stifle the country’s economic growth.

The finance minister who made the call during a courtesy visit to the headquarters of Voice of Nigeria in Abuja recently, had said, “VAT is one of the ways to increase revenue and we still have to increase VAT because, at 7.5 per cent, Nigeria has the lowest VAT rate in the world, not in Africa, in the world.

“In Sub-Saharan Africa, the African average is 18 per cent, when you increase your VAT, your Gross Domestic Product will grow.