Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 25)

Data from the National Bureau of Statistics (NBS) show that in the first quarter of 2022, Nigeria’s value-added tax (VAT) collected by the Federal Inland Revenue Service (FIRS) stood at N588.6 billion, representing an 18.6 percent increase compared to the N496.5 billion collected in Q1 2021.3 Decomposing the aggregate VAT revenue by classification indicates that local non-import VAT accounted for about 58.5 percent of total VAT in the period under review. Nigeria Customs Service (NCS) – import VAT accounted for 21.5 percent of total VAT, and Foreign non-import VAT accounted for 20 percent. Further analysis of the local non-import VAT shows that the manufacturing, information and communications (ICTs), and mining and quarrying sectors had the highest contributions, accounting for 32.8 percent, 17.1 percent, and 11.9 percent, respectively. While the increased VAT collection is a welcome development, considering the revenue projection of the government and rising expenditure in the post-COVID economy, the government needs to optimise all available revenue sources, including VAT. Consequently, there is a need for the government to frequently evaluate the tax automation strategies to identify areas for improvement to reduce tax evasion and ensure greater compliance by the companies. 

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