DATA from the National Bureau of Statistics (NBS) has shown that Nigeria generated a total of N2.42 billion from Value Added Taxes (VAT) and Company Income Taxes (CIT) charged on the consumption of productions and organisations in the first three months of 2024. 

This development comes amid concerns of several companies exiting the country due to Bola Tinubu’s administration policies on foreign exchange unification which have affected several companies’ negative balance sheets.

Currently, most companies struggle to have access to stable foreign exchange due to the volatile dollar rate which affects stable pricing for the production and the manufacturing sector.

Both VAT and CIT are imposed levies by the government which contributes to the country’s internal revenue, among other other levies.

While the country generated N1.43 trillion from VAT in the first quarter of 2024, N984.61 billion was generated from CIT. 

The VAT, levied on consumed goods, was reported to have grown by 19.21 percent on a quarter-on-quarter basis from N1.20 trillion in the fourth quarter of 2023. This increase is coming despite the economic hardship facing the country. 

This means that the more the price of goods goes up, the more revenue is generated by the government despite the dwindling economy falling to 2.98 per cent in terms of Gross Domestic Product. To better put this, the federal government has made more revenue from consuming goods and products as the inflation rate increases consistently, nearing 34 per cent as of April 2024.

Local VAT payments recorded were N663.18 billion, foreign VAT payments were N435.73 billion, while import VAT contributed N332.01 billion in first-quarter 2024. Major taxes were pulled from the Manufacturing, Information and Communication, Mining, and quarrying sectors, representing 27.6 per cent of the taxes collected. 

On the other hand, the impact of the economic hardship would stiffen investment for organisations. The ICIR reported that economies are beginning to exit the country, one year under the current administration. 

The CIT, taxes levied on organisations, indicated a drop of 12.87 per cent on a quarter-on-quarter basis from N1.13 trillion in the fourth quarter 2023. 

NBS report said, “ Local payments received were N386.49 billion, while Foreign CIT Payment contributed N598.13 billion in first-quarter 2024. 

“On a quarter-on-quarter basis, Activities of households as employers, undifferentiated goods- and services-producing activities of households for own use recorded the highest growth rate with 330.42 per cent, followed by Administrative and support service activities with 33.18 percent. On the other hand, activities of Manufacturing had the lowest growth rate with –70.24 per cent, followed by Electricity, gas, steam and air conditioning supply with –69.14 per cent.”

Recall that in 2023, Nigeria pulled a total of N8.54 trillion from both taxes. The amount is about 60 per cent higher than the  N5.34 trillion generated in the preceding year, 2022.

Tinubu’s tax policy

At the assumption of Bola Tinubu as president of Nigeria, in May 2023, the president said as part of his inaugural speech that industrial policy will utilize the full range of fiscal measures to promote domestic manufacturing and lessen import dependency.

He said, “I have a message for our investors, local and foreign: our government shall review all their complaints about multiple taxation and various anti-investment inhibitions.”

The ICIR further spoke to experts who said that Nigeria’s tax administration had faced many issues arising from multiple taxation, poor administration, tax touting, non-payment of tax refunds, and other complex natures of the tax laws.

However, recent developments within the administration have seen the introduction of new charges on electricity, banking, and other commodities. The Presidential Fiscal Policy and Tax Reforms Committee recently said it proposed a reduction of the multiple taxes paid to various levels of government to a single digit of eight taxes.

The ICIR went further to check VAT and CIT between the second quarter of 2023 and the first quarter of 2024. Our findings showed that revenue generated from VAT have consistently increased within one year. 

Table showing the taxes generated in Nigeria

Meanwhile, company taxes increased in the second and third quarters of 2023 but fell in fourth-quarter of 2023 and first-quarter of 2024. 

Kehinde OGUNYALE

Kehinde Ogunyale tells stories by using data to hold power into account. You can send him a mail at jameskennyogunyale@gmail or Twitter: Prof_KennyJames | LinkedIn: Kehinde Ogunyale