In the first six months of 2020, Nigerians pay a total of N651.77 billion as Value Added Tax (VAT) to the wallet of the federal government through consumption of goods and services.
Latest statistics obtained by BuisnessMetricsNG from the National Bureau of Statistics (NBS) show that the sum of N651.77 billion was generated as Value Added Tax (VAT) for HY1 period.
The amount generated during the period represents 8.45 per cent growth from the N600.98 billion generated during the corresponding half of 2019.
As the remitted VAT increased in the period under review despite the impact of coronavirus pandemic that led to less comsumption of Nigerian due to harsh economy at the same time, experts have attributed the slight increase to the reviewed VAT effect.
Recall that the federal government, upon signing of the Finance Bill into law by President Muhammadu Buhari earlier this year, reviwed VAT upward from hitherto 5 per cent to 7.5 per cent effective from February this year.
The VAT report further revealed that professional services generated the highest amount of VAT with N75.92 billion and this was closely followed by the manufacturing sector, which generated N67.63 billion.
Commercial and trading sector recorded the sum of N31.10 billion, while mining generated the least with N127.58 million.
The VAT statistics also showed that textile and garment industry and pharmaceutical, soaps and toiletries posted N499.19 million and N648.78 million respectively.
A further analysis of the data indicates that out of the total amount generated, N335.82 billion was generated as non-import VAT locally, accounting for a 16.35 per cent growth year on year when compared to the N288.63 billion generated during the first half of 2019.
Meanwhile, the locally generated non-import VAT experienced a downtrend of 5.51 per cent in the first two quarters of 2020 where the former raised N172.67 billion and the later achieving N9.52 billion less at N163.15 billion.
Similarly, the non-import VAT for foreign stood at N161.74 billion, representing a 16.58 per cent decline on annual comparison or N32.14 billion, compared to the previous first half year’s figure of N193.87.
However, the data report from the statistics bureau further revealed that there was 3.92 per cent sectoral growth in the foreign non-Import VAT as the first quarter raised N79.32 billion while N82.42 billion was documented for the second quarter of the year under review.
A total of N154.21 billion was generated as NCS-import VAT. This figure from the NCS-import VAT represents a 30.15 per cent growth from N118.5 billion recorded in the first half of 2019.
This figure includes the N72.59 billion and N86.62 billion raised in the first and second quarters of 2020, which is a 12.44 per cent increase on quarterly bases during the year under review.
A closer examination of the total VAT generated for the period under review further showed that of the N651.77 billion canvassed aggregates from the N324.58 billion realised in the first quarter of 2020 and N327.2 billion in the second quarter of 2020 representing a 0.81 per cent growth rate on a quarterly comparison and 8.45 per cent on yearly comparison where it recorded N293.03 billion and N311.94 billion during the first and second quarters of 2019 respectively.
Although, there have been expectations in the VAT growth coming with the increase in the VAT rate from 5 per cent to 7.5 per cent, it can be said that the effect of the global pandemic has exerted pressures on the VAT levied on the locally made goods.
Consequently, it will be safe to ascribe recorded decline in the foreign generated VAT to the constrain on imported products occasioned by the interruption brought about by the pandemic and leading importers to cut back on the purchasing strategy in response to the deceleration in the demand for foreign goods and services.