Will the FG Tax Reforms Support Revenues in 2020?


Wednesday, January 15, 2020 /03:57 PM / By CSL Research / Header Image Credit: Pulse NG


Following the Presidential assent to the finance bill, the Minister of Finance, Zainab Ahmed, disclosed that the new tax reforms as contained in the finance bill will help the Federal Government (FG) achieve its 2020 revenue estimate of N8.16tn. She further noted that although the Finance Law proposes an increase of VAT rate from 5% to 7.5%, a large sum of money (50% and 34%) realised from the taxation would go to states and local governments respectively while the balance of 15% will go to the FG.


Over the years, the federal government has struggled to meet up with its revenue target owing to persistent shortfalls in its two major sources of revenue; oil and non-oil revenues. On one hand, the underperformance in oil revenue has often been attributed to volatilities in oil prices, disruptions to crude oil production caused by militant activites, shut-ins and shut-downs at NNPC terminals, due to pipeline leakages and maintenance activities.


On the other hand, the sub-optimal performance in non-oil revenue has been alluded to the decline in revenue from VAT, Education Tax and Federal Government Independent Revenue (funds generated by agencies). Based on data obtained from the CBN's monthly and quarterly economic report, total revenue came to N3.4tn for the first eleven months in 2019 compared with prorated budgeted revenue of N6.4tn, translating to a performance of 53%.

Proshare Nigeria Pvt. Ltd.

Considering the changes made to the nation's tax laws particularly in Value Added Tax (VAT), Customs and Excise Tariff, Stamp Duties Acts, we ask; How far can the various tax reforms go in supporting government revenues in 2020? In our opinion, we think the amendments to the tax laws will bear some fruits and improve government revenue, however we believe revenue will continue to lag budgetary estimates owing to OPEC+ production cuts which limits the nation's ability to reach the budget assumption of 2.18mbd.


Proshare Nigeria Pvt. Ltd.

Related News - Finance Bill 2019

  1. President Buhari Signs Finance Bill, 2019
  2. Nigeria's Finance Bill 2019 Key Changes and Implications
  3. Finance Bill 2019 Compels Individuals to Produce Their TIN Before Operating Bank Accounts
  4. House of Representatives Passes Finance Bill, 2019
  5. Finance Bill 2019: Tax Implications for Nigerian Entities
  6. Senate Passes Finance Bill, 2019
  7. 2019 Finance Bill: 20 Sweeping Changes To Nigeria's Tax Laws That May Affect You
  8. The Key Changes In The 2019 Finance Bill - Focus on Taxation


Proshare Nigeria Pvt. Ltd.

Related News - Taxes and Tariffs

1.       Oil Marketers Kick Against N50 Stamp Duty

2.      Major Tax Events That Shaped 2019 and What To Expect In 2020

3.      FIRS Offers One-Month Window To Ease TCC Issuance

4.      Thoughts on The FIRS Chairman's End of Year Letter To Staffers

5.      Merchants Prohibited From Assessing Any Duty or Costs Characterised As Stamp Duty On Consumers

6.      Fowler's Fouls: What Tunde Fowler Did Wrong at FIRS

7.      Countdown to Country-by-Country Reporting Filing Deadline for Companies With 31 December Year-end

8.     FIRS Gives 7-Day Notice To Tax Defaulters; To Commence Nationwide Enforcement

9.      Validity of Consumption Taxes Imposed by State Governments in Nigeria

10.  Reminder to File Country-By-Country Reporting Notification

11.   Double Tax Treaty (DTT) In Nigeria - FIRS Clarifies the Rules for Claiming Treaty Benefit

12.  TAT Clarifies The Basis For Computing Interest On Tax Liabilities

13.  ''Illegal'' Taxes: Our Road to Redemption?

14.  Why Nigeria Needs To Improve Its Ease of Tax Payments

15.  Custom Duty Collecting Bank - Celebrating Another First with FSDH Merchant Bank

16.  N275.12bn Generated As VAT In Q3 2019 - NBS

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Related News