Some Encouraging Signs From VAT Receipts

Proshare

Tuesday, September 08, 2020 10:37 AM / By FBNQuest Research / Header Image Credit: The Numbershift

 

Proshare Nigeria Pvt. Ltd.


In advanced economies, big data such as VAT collections allow analysts to give an early heads-up on the direction of an economy. The numbers on collections, for example, are available well ahead of the national accounts. Big data is so named because of the scale of the information, which has great microeconomic potential. In Nigeria, in contrast, large segments of the economy are outside the tax net but the data, drawn by the NBS from the Federal Inland Revenue Service (FIRS), have its uses. The breakdown by paying sector in the chart covers just locally collected VAT.

                                                                                              

Manufacturing is comfortably the largest contributor when we recall that the category in the chart excludes breweries, textiles, chemicals, printing, petroleum refining and conglomerates.

 

In advanced economies there are large receipts from hotels and catering, which accounted for just 1.4% of the total in Nigeria last year. Professional services generated the second largest share of 19.2%, which probably reflects their high profile and scale of fees, and their extensive work for the FGN.

 

We are surprised that the take from state government ministries and parastatals (7.2%) was higher than that of their federal counterparts (6.0%).

 

Total local collections increased by 26.0% y/y to N173bn in Q1 2020, and so well ahead of nominal GDP growth of 12.0%. The rise in the standard rate of VAT to 7.50% from the start of February would have provided a boost, subject to the new exemptions granted by the FGN. We hope that, as with companies' income tax, the FIRS has been able to broaden its coverage too.

 

 

Total: N585bnLocally collected VAT by sector 2019 (% shares)

Proshare Nigeria Pvt. Ltd.

 

Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research

 

Separately, we have noted a steady rise in the monthly payout from the VAT Pool (local and foreign collections) by the Federation Account Allocation Committee to N132bn in June (Good Morning Nigeria, 28 August 2020).

 

Proshare Nigeria Pvt. Ltd.


Related News -  Nigerian Economy

  1. FAAC Payout Well Short of States' Needs
  2. NESG Issues 15-Point Statement on The State of Nigeria's Economy
  3. FAAC Allocation for June Dips Amidst Concern About the Coronavirus
  4. FAAC Disburses N547.31bn in June 2020 - NBS
  5. COVID-19: NESG Partners AIG To Develop Incidence and Response Tracker Dashboard
  6. Sept 2020 Economic Insight: Gone Deep Enough, Recovery Could Lengthen - Nova
  7. Sharp Decline in Merchandise Trade in Q2 2020
  8. When The Going Gets Tough, The Tough Get Going - LBS Executive Breakfast Session - September 2020
  9. Trade Deficit Underscores Depth of Nigeria's FX Issues
  10. The Socio-Economic Impact of COVID-19 in Kano, Lagos, Rivers, and FCT Abuja

 

Proshare Nigeria Pvt. Ltd.


Related News - Taxes and Tarrifs

  1. FIRS Launches Reporting Portal for Financial Institutions
  2. Sanwo-Olu Suspends Director for Imposing 5% Levy on Netflix, Iroko TV, Others
  3. Demand Pressure on Tax Collection
  4. FIRS: Total Collection Met 56% of Target in Q1 2020
  5. Some Hopeful Signs in Non-oil Revenue
  6. Taxation of Non-Resident Companies with Significant Economic Presence in Nigeria
  7. COVID-19: DSBIR Approves Waiver of Interest and Penalties on Outstanding Tax Audit Liabilities
  8. Much Ado About the FIRS' 6% Stamp Duty on Leases
  9. VAT Collection Edges Higher But Indicates Weaker Economy
  10. N651.77bn Generated as VAT in H1 2020 - NBS
  11. FIRS Provides Clarifications on Administration of Stamp Duties in Nigeria
  12. COVID-19: Bayelsa, Kebbi and Ogun State Govts Announce Various Palliatives for Resident Taxpayers
  13. LIRS Announces Implementation of Additional Tax Incentives and Reliefs for Taxpayers in Lagos State
  14. FIRS Further Extends Deadline for Waiver of Interest and Penalty on Outstanding Tax Liabilities
  15. Stamping of Electronic Documentations Under the Stamp Duties ACT as Amended by the Finance ACT
  16. Takeaway from Inauguration of Committee on Recovery of Stamp Duties
  17. FIRS Issues Public Notice on VAT (Modification Order) 2020 - Items Not Exempted from VAT
  18. FIRS Clarifies Changes Introduced to Nigerian VAT Regime by the Finance ACT 2019
  19. VAT Modification Order: Any Contrary Position Expressed by the FIRS Cannot Stand
  20. COVID-19: LIRS Announces TARC Meeting Procedures

Proshare Nigeria Pvt. Ltd.
READ MORE:
Related News
SCROLL TO TOP