Business News

FG to get N593 billion as its share from VAT collection in 2024

The federal government has set a target of generating around N593.1 billion in 2024 from Value Added Tax (VAT) collection. This is according to the revenue projection of the 2024 appropriation bill sent to the Senate.

According to the federation revenue section of the document, the total revenue projection of the federal government in 2024 is N12.7 trillion.

Of this amount, the main pool of federation revenue stands at 12.1 trillion, while targeted revenue from Value Added Tax (VAT) is N593.1 billion.

VATs are consumption taxes imposed on goods and services purchased. In February 2020, the federal increased the rate for VAT from 5% to 7.5%.

Recent revenues from VAT

In 2022, the federation generated N2.51 trillion from VAT marking a 21.2% increase from the N2.17 trillion generated in 2021.

From this figure, the federal government earned N375 billion which is the statutory 15% earmarked for the federal government from VAT collection.

In recent years, Nigeria has experienced substantial growth in VAT revenue, attributable to the increase in the VAT rate from 5% to 7.5% in 2020.

Since the adjustment, the country’s VAT collection has doubled, reaching a record high of N2.51 trillion in 2022.

In the first half of 2023, Nigeria has collected around N1.49 trillion from Value Added Tax (VAT) according to the data from the National Bureau of Statistics (NBS).

VAT collection in the second half of 2023 increased by 10% when compared to the figure for the previous quarter.

What you should know

Nigeria has been seeking to increase revenue collection in the non-oil sector to fund capital projects and reduce the need for debt.

The current tax-to-GDP ratio stands at 10.8%- far below its contemporaries in Sub-Saharan Africa and the World Bank’s recommended average of 18%.

The administration of President Bola Tinubu has set up the Presidential Committee on Fiscal Policy and Tax Reforms to address the bottlenecks in the nation’s tax policy geared towards increasing the tax-to-GDP ratio.

Download TheTimes App for breaking news and market intelligence.
    app store banner

Back to top button