The Nigerian government has been advised by the World Bank to raise the Value-Added Tax (VAT) rate to generate more non-oil revenue.
To generate more money from the non-oil sector and put more money into the federal government’s purse, the World Bank in its latest Nigeria Development Update (NDU) themed “Turning The Corner, From Reforms and Renewed Hope to Results, has urged the Nigerian Government to raise the VAT rate.
In the report, the World Bank stressed the need for the Nigerian government to increase non-oil revenues by increasing the Value Added Tax (VAT) rate from the present 7.5% as a way to create more fiscal space and generate more non-oil revenue.
It mentioned the need to ameliorate tax administration, allow for input tax credits, start using a data-driven approach to tax audit, as well as launch a simpler turnover tax on Small and Medium-scale Enterprises (SMEs) at the state level instead of different existing fees and levies.
The bank also pointed out that the exemptions on petrol should be removed.
FG Collects ₦948.07 Billion VAT in Q3 2023
The Nigerian Government has collected a total of ₦948.07 billion as Value Added Tax (VAT) in the third quarter of 2023.
According to a recent report published by the National Bureau of Statistics (NBS), the figure indicates a growth rate of 21.34% compared to the ₦781.35 billion that was generated in Q2 2023.
A further breakdown by the report shows that local VAT payments contributed ₦522.08 billion, foreign payments amounted to ₦204.58 billion, while an amount of ₦221.41 billion was obtained from Import VAT.
Examining the growth rates of different sectors, the report shows that agriculture, forestry, and fishing experienced the highest growth rate of 91.87% on a quarter-on-quarter basis.
Following closely are the activities of extraterritorial organizations and bodies, which experienced a growth rate of 80.25%.
The real estate sector, however, had the lowest growth rate of -37.68%, followed by the construction sector with -9.54%.
The substantial increase in VAT collection for the Nigerian Government shows a positive trend in economic activity and consumer spending.
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