Monday, February 12,
2018 /09:44 AM /FBNQuest Research
From the CBN’s Economic Report Fourth Quarter 2017 we
can see the limited success of the fiscal branch of the FGN’s diversification
agenda. Gross non-oil revenue in 2017 amounted to N3.24trn, and so well short
of the target for the full year, implied in the CBN’s commentary, of N5.34trn.
Gross oil revenue in the
same period of N4.11trn was far closer to budget due to the recovery in oil
production and prices. Data from the same source has average crude oil output
rising from 1.75 mbpd in Q1 2017 to 1.98 mpbd in Q3.
Non-oil revenue peaks in the third quarter because
of the deadline for payment of companies’ income tax (CIT). This has been the
case every year since 2010, when collection was marginally higher in Q4.
The chart does show some positive momentum on the
non-oil revenue side. Collection of N815bn in Q4 represented an increase of
22.5% y/y: drilling down into the sub-categories, we see rises of 59.4% for
CIT, 21.0% for VAT, and just 7.9% for customs and excise. As the economy has
emerged from recession so we would have expected this improved take, most of
all from VAT.
We also expect that in 2018 non-oil will again
underperform oil revenue collection relative to their respective targets. The
FGN’s budget proposals have an ambitious assumption for production of 2.30
mbpd. However, we still see some useful room for manoeuvre for the FGN from the
price although the Senate has already raised the assumption to US$47/b and may
push for another rise in the continuing negotiations.
The FGN is committed to boosting non-oil revenue
collection through improving coverage rather than the quicker route of hiking
tax rates. It has, however, proposed a new higher rate of VAT for luxury goods.
1. Nigeria’s non-oil exports increased by 55% to $1.26bn in
2. N2.63trn Flows into Federation
Account from Non-oil Revenue in 12 Months
3. Economy Returned to Positive Growth in 2017 But the
Non-Oil Sector Performance Remains Weak
4. Q3 17 GDP: Oil Led Growth Mask Deceleration in Non-Oil
5. Budget 2018: Nigeria Targets Consolidation but Revenues
May Fall Short
out of 70m economically active Nigerians are tax compliant- Adeosun
Deadline for Tax eVAIDers
Legislation and its Shades of Gray - Service Rendered By Non-Residents And VAT
Legislation and its Shades of Gray – Service rendered by Non-residents and VAT
Signs Double Tax Treaty with Spain into Law
Issues the Income Tax (Country-By-Country Reporting) Regulations 2018