Nigeria realised N3.49 trillion as revenue from Company Income Tax (CIT) and Value Added Tax (VAT) at half year 2023, amounting to an increase of 42.2 percent over the N2.45 trillion realised from the two income sources at half year 2022, the latest national revenue data from the National Bureau of Statistics (NBS) have shown.
Revenue from CIT amounted to N469 billion at the end of the first quarter of this year and a whopping N1.53 trillion between April and June 2023, bringing the total half year revenue from CIT to N1.999 trillion, translating to an increase of 58 percent over N1.27 trillion the country generated from CIT as of June 2022.
The latest CIT and VAT data came at a time when the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by former PwC tax guru, Taiwo Oyedele, promised to reform the nation’s tax systems towards increasing tax revenue, and subsequently the nation’s tax to GDP ratio.
“Many of our existing laws are outdated, hence they require comprehensive updates to achieve harmonisation and address multiplicity of taxes, remove the burden on the poor and vulnerable while addressing the concerns of all investors, big or small.
“Our tax administration has improved but remains relatively basic, with instances of unregulated collections by untrained officers, particularly at the Local Government level, being widespread.
“Our revenue generation falls below even African standards, yet our collection costs are among the highest. This is due not only to multiple taxes but also numerous collection agencies and fragmented revenue reporting procedures,” Taiwo Oyedele said, during the inauguration of the committee in August.
When compared with the CIT revenue as at the end of the first quarter of 2023, the country’s CIT earnings rose by 226.4 percent from N469 billion to N1.53 trillion from first to second quarter respectively. Not only that, the CIT revenue generated in the second quarter of this year alone was more than the total CIT revenue at half year 2022.
“On a quarter-on-quarter basis, water supply, sewerage, waste management, and remediation activities recorded the highest growth rate with 626.52%, followed by accommodation and food service activities with 585.11%. On the other hand, education had the lowest growth rate with – 15.48%, followed by public administration and defence, compulsory social security with 25.46%. In terms of sectoral contributions, the top three largest shares in Q2 2023 were manufacturing with 25.63%; financial and insurance activities with 24.47%; and information and communication with 20.30%,” NBS said yesterday.
The surge in CIT during the second quarter was due to the noticeable improvement in the taxes collected from the information and communication sub-sector, manufacturing, other service activities, transportation and storage; water supply, sewage and waste management, among others.
For VAT, the increase was 10.11 percent on a quarter-on-quarter basis and 30.19 percent on a year-on-year basis. Manufacturing and the information and communication sectors remained the most contributing sectors to VAT as Nigeria generated N151.78 billion and N108.48 billion from the two sub sectors respectively at the end of the second quarter alone.
By generating N436.09 billion and N512.03 billion, local VAT accounted for 61.5 percent and 65.5 percent of the VAT revenue in first and second quarters of 2023 respectively compared to 58.5 percent and 59.8 percent at the end of the first and second quarters of 2022 respectively.
“On a quarter-on-quarter basis, the activities of extraterritorial organizations and bodies recorded the highest growth rate with 212.06%, followed by real estate activities with 123.09%,” NBS stated.
“Empirical data affirms that Nigerians are willing to fulfill their tax obligations when they see meaningful returns on their tax contributions. We must therefore be intentional in renewing the social contract and, more importantly, act in the best interest of our nation,” Oyedele added.
