August 14, / 10:15 AM /
by FBNQuest Research / Header Image Credit: India
From 2011 through to 2014 FIRS comfortably met its targets for collection. It has since fallen short because the administration elected in 2015 (and re-elected last year) favours fiscal expansion and sets aggressive targets. For 2020 the service initially aimed to collect N8.50trn, which would have been a 62% increase on the outturn in 2019. Covid-19 has since intervened, so the quarterly target appears to have been slashed from N2.13trn to N1.27trn. The cut in the target for collection of petroleum profits tax (PPT) has been brutal.
Total collection met just 56% of the far higher target in Q1 and, once the bar had been lowered, marginally exceeded it in Q2. This outperformance was due to the collection of N440bn from PPT vs a much reduced target of N71bn.
Relative to the target for Q2, non-oil tax receipts of N850bn represented 71%. Other than stamp duty and contributions to a development fund for higher education (NITDEF), the collection of all non-oil taxes and levies fell short of target.
Relative to previous outturns, the story is mixed. Receipts from companies' income tax (CIT) in Q2 were well down on 2019 (and 2018). They peak between June and September, however, and it could well be that lockdown directly and indirectly delayed payments.
Tax collection by FIRS (N trn)
Sources: Federal Inland Revenue Service (FIRS); FBNQuest Capital Research
Non-import VAT was flat y/y in Q2 at N246bn while NCS (Nigeria Customs Service)-import VAT grew by 26% and stamp duty collection soared from N4bn to N63bn.
The base of large taxpayers is small and our suspicion is that the collection agencies, pressed by the FGN to raise funds for the fight against the virus, will target them disproportionately.