FG Collects N185BN Taxes from Traders, Mechanics despite Economic Challenges

Taxes paid by Nigerians involved in the wholesale and retail trade, as well as the repair of motor vehicles and motorcycles, surged by 49% in the first six months of 2024 compared to the same period last year.

This is according to data from the tax reports of the National Bureau of Statistics (NBS).

Based on the data released by the NBS, this leap in tax revenue is the result of hikes in both Value Added Tax (VAT) and Company Income Tax (CIT) receipts.

CIT, which is pegged at 30%, is levied on the profit of corporations, while VAT — set at a rate of 7.5% — is a consumption tax imposed at the point of sale on goods and services, ultimately shouldered by the end consumer.

According to the report, the total tax contribution from the sector in H1 2024 amounted to N185.19 billion, up from N124.39 billion in H1 2023, amid Nigeria’s ongoing economic challenges.

A closer look at the data shows that VAT collections grew by 50%, increasing from N63.24 billion in H1 2023 to N94.76 billion in H1 2024.

This rise indicates robust consumer spending, amid the high inflationary environment. Similarly, CIT for the sector jumped by 48%, rising from N61.14 billion in H1 2023 to N90.43 billion in H1 2024.

This growth in CIT suggests that businesses in the sector remained profitable, even as they grappled with rising operational costs driven by inflation and other macroeconomic headwinds.

When compared to the second half of 2023, the data shows that total taxes grew by 44% between H2 2023 and H1 2024. In H2 2023, the sector paid a total of N128.68 billion in taxes, with VAT contributing N74.86 billion and CIT accounting for N53.82 billion.

The sequential increase highlights stronger tax collection efforts as well as a steady pace of economic activity, despite inflationary pressures.

The surge in taxes, however, is partly reflective of inflation, which has significantly raised the cost of goods and services, thereby boosting VAT collections.

Businesses, in turn, have faced higher costs for inputs, fuel, and other operational expenses, leading to squeezed profit margins, and higher tax payments.