The drive to improve the government’s non-oil revenue generation has been boosted as Nigeria’s Value Added Tax (VAT) reached N600.15 billion at the end of the second quarter of 2022, according to data from the National Bureau of Statistics (NBS). .
In the second quarter of 2021, the total realized VAT was 512.25 billion naira, implying that the second quarter VAT was 17.2% higher on an annual basis and 1.96% higher at 588 naira. 60 billion made in the first three months of this year. This effectively puts realized VAT in the first half of this year at N1.1 trillion compared to N1 trillion in the corresponding period of 2021.
“Overall, Value Added Tax (VAT) for the second quarter of 2022 was reported at N600.15 billion, showing a growth rate of 1.96% on a quarterly basis from 588, 59 billion naira in the first quarter of 2022. Local payments recorded were 359.12 billion naira, while foreign VAT payment contributed 111.13 billion naira in the second quarter of 2022. In terms of sectoral contributions, the top three shares in the second quarter of 2022 were manufacturing at 33.08%; information and communication at 18.98%; and mining and quarrying at 10.60%,” the NBS report said.
Africa’s largest crude oil producer has been unable to take advantage of the global crude oil windfall due to crude oil theft and subsidies on petroleum products. Consequently, Nigeria’s fiscal position has deteriorated in 2022, with the country recording fiscal deficits of N3.09 trillion from January to April this year. Indeed, the cost of additional borrowing has soared due to the hawkish stance of most central banks around the world. The Nigerian central bank recently raised the benchmark interest rate to 14% in July.
Nigeria’s Q2 2022 real GDP growth rate of 3.54% exceeded many analysts’ expectations, beating real growth of 3.11% in the previous quarter. In July, headline inflation soared to 19.6%, a development that prompted many stakeholders to expect a further rate hike above the Central Bank of Nigeria’s current 14%.
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On a quarterly basis, the largest growth in VAT came from the utilities sub-sector comprising supply of electricity, gas, steam and air conditioning, where a total of N3.97 billion in VAT was generated. was realized in the second quarter of 2022 compared to 1.83 billion naira in the first quarter. 2022. VAT growth in this subsector was 116.5% quarter-on-quarter.
Distribution companies have improved revenue generation lately. Industry revenue increased from N526.77 billion in 2020 to N761.17 billion in 2021. In the first three months of 2022, power distribution companies in Nigeria earned N777 billion. revenue naira, according to data provided by the Association of Nigerian Electricity Distributors (ANED). ).
VAT generated in the accommodation and food service activities sub-sector increased by 42.4% to N5.24 billion in the second quarter of 2022 from N3.68 billion in the first quarter of 2022. In addition, a total of N32.11 billion in VAT was generated in public administration and defence. , compulsory social security sub-sector which represented an increase of 28.2% from the N25.00 billion realized in the first quarter of 2022.
GDP for the accommodation and food services subsector grew by 3.30% at the end of the second quarter of 2022, well above the real growth of 1.93% in the first quarter. In addition, BusinessDay previously reported that the housing market in Nigeria will experience an increase in rent payments, caused by soaring inflation rate which has led to an upward trend in the prices of building materials in the country. .
VAT generated from agriculture, forestry and fishing amounted to 1.05 billion naira, an increase of 26.5% from 827.58 million naira in the first quarter of 2022. This s came amid a not-too-impressive real GDP growth rate of 1.20% in the second quarter of 2022. compared to real growth of 3.16% in the first quarter of 2022.
Other subsectors that recorded double-digit VAT growth rates on a quarterly basis were information and communication, 15.9%; real estate, 14.9 percent; transportation and warehousing, 14.2%; and wholesale and retail trade, 13.2%.
Meanwhile, VAT for the manufacturing subsector only increased by 5.2% in the second quarter of 2022. This is a subsector that accounted for 33.1% of local VAT and 19.8 % of total VAT in the second quarter of 2022. GDP for the manufacturing subsector increased by 3% in the second quarter of 2022, compared to 5.89% in the first quarter of 2022.
Nevertheless, six sub-sectors saw a huge drop in VAT collected during the second quarter of 2022. These sub-sectors are water supply, sewage and waste management, which saw their VAT in the second quarter drop 15.1%; other service activities, 16%; financial and insurance activities, 23.7%; administrative and support service activities, 30.3%; household activities, 36.6%, and activities of extraterritorial organizations, 42.4%. In total, VAT collected from these sectors decreased by N11.8 billion in the second quarter compared to the first quarter of 2022.