The Federal Government’s revenue from Value Added Tax (VAT) hit a new high in the second quarter of 2024, reaching ₦1.56 trillion. This represents a 9% increase from the ₦1.43 trillion recorded in the first quarter, marking a significant rise in VAT contributions across various sectors of the economy.
According to the National Bureau of Statistics (NBS), local payments accounted for ₦792.58 billion, while foreign VAT payments contributed ₦395.74 billion. On the import side, VAT collections amounted to ₦372.95 billion. These figures reflect the government’s increasing reliance on VAT as a major source of revenue, with businesses and individuals contributing through their everyday transactions.
Which Sectors Led the Charge?
In terms of growth rates, some sectors stood out with significant increases. Human health and social work activities experienced the highest growth, with a 98.44% rise. This was followed by agriculture, forestry, and fishing, which grew by 70.26%, and water supply and waste management, which recorded a 59.75% increase.
On the other hand, households as employers and real estate activities showed slower growth rates, at 46.84% and 42.59%, respectively. While these sectors contributed less in terms of growth, they still played a role in the overall VAT collection figures.
Biggest Contributors
When it comes to the largest share of VAT contributions, the manufacturing sector took the lead, accounting for 11.78% of the total revenue. This was followed by information and communication, which contributed 9.02%, and mining and quarrying with 8.79%. These industries continue to be key players in driving Nigeria’s economic activity.
Meanwhile, sectors such as households as employers and extraterritorial organizations contributed the least, with shares as low as 0.00% and 0.01%.
VAT Growth Over the Years
Compared to the second quarter of 2023, VAT collections have nearly doubled, showing a 99.82% increase in 2024. This sharp rise highlights the government’s focus on expanding its tax base and improving compliance across different sectors.
With VAT revenues on the rise, the Federal Government now has more funds to support its development programs. However, as more businesses and individuals feel the effects of these taxes, it will be important for the government to strike a balance between revenue generation and ensuring that economic activities continue to thrive.
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