VALUE Added Tax (VAT) data for the first quarter (Q1) of  2020 has shown that the sum of N338.94 billion was generated against N308.48 billion generated in the fourth quarter (Q4) of 2019, the National Bureau of Statistics (NBS) has reported.

This figure represents an increase of N30.46 billion compared to Q4 2019 before the tax amendment from 5 per cent to 7 per cent.

According to the report, N293.04 billion generated in Q1 2019 representing 9.87 per cent increase Quarter-on-Quarter and 15.66 per cent increase Year-on-Year.

Professional Services generated the highest amount of VAT with N38.30 billion generated and closely
followed by manufacturing generating N37.37 billion and commercial and trading generating N17.19 billion.

Mining generated the least (N61.83 million) and closely followed by textile and garment industry (N306.05 million) and local government councils (N319.04 million), the report stated.

Out of the total amount generated in Q1 2020, N172.67bn was generated as Non-Import VAT locally while N93.67bn was generated as Non-Import VAT for foreign.

The balance of N72.59bn was generated as NCS-Import VAT.

Aboderin Martins a financial consultant who spoke to The ICIR said “Nigerians should expect increased revenue from taxes because of the recent increase in VAT, but the question is, would it be channelled into the right place.”

It will be recalled that on the 13th of January, 2020, President Muhammadu Buhari signed the Finance Bill (now Finance Act 2019 (the “Finance Act”)) into law.

The finance act was gazetted on 14th January 2020 with a commencement date of 13th January 2020.

The Finance Act amends the major tax statutes in Nigeria to align with the Federal Government of Nigeria’s monetary and fiscal reform policies.

Of particular concern to businesses and consumers with regard to the Finance Act is perhaps, the introduction of a new VAT system, and an increase in the VAT rate from 5 per cent to 7.5 per cent.

Besides the increment of the VAT rate, there are other notable amendments to the VAT Act which will significantly impact the business landscape in Nigeria.