Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 49)

According to the National Bureau of Statistics (NBS) latest report on Value-Added Tax (VAT), there was a 17.8 percent year-on-year increase in VAT revenue in Q3 2021. However, on a quarter-on-quarter basis, there was a 2.3 percent decrease.1 VAT collected in Q3 2021 was N500.4 billion. This was lower than the VAT revenue generated in Q2 2021 which stood at N512.3 billion. In Q3 2020, VAT was N424.7 billion. The quarter-on-quarter decline in VAT collection was mainly caused by the sharp decline in non-import (foreign) VAT, which contracted by 60.9 percent, thereby eroding the increase recorded in non-import (local) VAT and Nigeria Customs Service (NCS) Import VAT, which both grew by 57.6 percent and 5.7 percent, respectively. The increase in the non-import (local) VAT indicates that the recent debate on who has the constitutional right to collect VAT has minimal impact on total VAT collection. Further, the year-on-year increase in VAT also reflect a growth in economic activities. The current fiscal position of the government suggests that all available revenue sources are maximized. Therefore, in order to optimize revenue generated from VAT, it becomes imperative that the coordination issue associated with VAT collection is addressed.

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