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Tag: VAT

  • VAT designed to support the poor – Fowler

    The Federal Inland Revenue Service (FIRS) has stated the Value Added Tax (VAT) is a consumption tax primarily designed to support poor people, and not to create hardship for them.

    Executive Chairman of the FIRS Babatunde Fowler allayed fears that the increase in VAT may cause hardship for the poor, stating that VAT is charged on consumption and capacity to consume.

    A statement by the Service on Tuesday quoted the FIRS Chairman as saying: “When you don’t consume certain categories of goods and services, you are not liable to pay VAT charges on those items.

    “VAT is not charged on all medical and pharmaceutical products. It is not charged on basic food items.

    “It is not charged on books and educational materials. It is not charged on baby products, fertilizers, locally produced agricultural and veterinary medicine.

    “VAT is not charged on farming machinery and farming transportation equipment.

    “VAT is not charged on all exports, plant machinery and goods imported for use in Export Processing Zones and free trade zone: Provided that 100 percent production of such company is for export.

    “Other services exempted from VAT are Medical services, Services rendered by Community Banks, People’s Bank and Mortgage Institutions, plays and performances conducted by Educational Institutions as part of learning and all exported services are exempted from VAT.”

    Fowler said he understands “that some people misunderstand what the VAT is. VAT is a consumption tax.

    “If you don’t have money to purchase certain categories of goods and services and you don’t consume them, then VAT is not your problem.

    “The VAT is used to assist the needy. VAT provides support for the needy, not a hardship on them.

    “85 percent of VAT collected is shared among states for them to provide free education, free health services, provide basic amenities among others.

    “We can see what the Federal Government is doing with the tax money. Look at the rail system, the Abuja-Kaduna rail is complete.

    “Look at the Lagos-Ibadan expressway, look at the education system, the school feeding program among others.

    “If at the state level, your government cannot justify the taxes you pay to them, you have the right to vote them out in the next four years,” Fowler said.

    Fowler said that if countries like United Arab Emirate (UAE), Saudi Arabia who are rich in oil resources would be laying emphasis on taxation, Nigeria should also emulate them.

  • N30k Minimum wage: Fowler denies recommending 50 per cent increase in VAT, others

    The Federal Inland Revenue Service (FIRS), has dismissed media reports quoting its Chairman, Mr. Tunde Fowler, as suggesting an increase in the rate of of Value Added Tax (VAT) from five per cent to 50 per cent.

    Various media outlets, Tuesday, quoted Fowler as recommending a hike of that proportion during a meeting with members of the Senate Finance Committee at the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (PSP) in Abuja.

    In a statement issued by its Communication Unit, the FIRS said what Fowler recommended is an increase in the number of individuals and business entities paying VAT. The Service also rebutted reports that Fowler called for an increase in the rate of Companies Income Tax (CIT), stating that what the FIRS boss suggested is a reduction in CIT rate for small businesses, so as to improve compliance.

    The statement, signed by Wahab Gbadamosi, Director, Communication and Servicom, said while Fowler suggested an increase in VAT rate by the end of the year, it was not by 50 per cent.

    Rather, the FIRS explained in the statement, Fowler promised improved collection in CIT, Petroleum Profits Tax, (PPT) and VAT in 2019 relative to the collection performance of the Service in 2018.

    In 2018, the FIRS collected the sum of N1.1 trillion in VAT, N1.42 trillion in CIT and N2.4 trillion in PPT.

    Asked by Senator John Enoh (Chairman, Senate Committee on Finance) how the FIRS aims to surpass the record revenue collection of N5.32 trillion last year in view of the fact that it has been given a target of N8 trillion for the current year, the statement said Fowler responded that the FIRS has increased VAT collection over the last three years by over 25 per cent.

    “In terms of whether there should be an increase, I believe there should be an increase.

    “One issue about taxation is that it should be fair to all. We have discovered after VAIDS (Voluntary Assets and Income Declaration Scheme) that a high percentage of businesses are collecting VAT and not remitting.

    “We’ve also tried to address this issue. We’ve issued new VAT certificates. We have appealed to the public that if they are charged VAT and they are not sure it had been remitted, they should contact us. We even gave a small promotion that for every 25 names that they give to us, we give them a little gift either a power bank or something to show appreciation.

    “But that aside, we are also on the streets. We have a team called FEETT (Federal Engagement and Enlightenment Tax Teams) going around to confirm that businesses are registered for VAT.

    “I believe with the substitution of over 50,000 bank accounts that we just started this week, I am sure that those businesses that have been collecting VAT and not remitting the same or not remitting any tax payment are beginning to ensure that the level of tax compliance is improved.

    “I believe that by the end of this year, government and Nigerian people should be ready for an increase in VAT,” the statement quoted Fowler as saying.

    The FIRS boss noted that many Nigerians travel to Ghana and other West African countries where VAT rates are much higher, adding that as the economy improves, there will be an increase in VAT and they should be ready for it.

    He described the target of N8 trillion as challenging, but foresees an increase in the VAT collection rate of between 35 to 50 per cent this year because of improved enforcement activities.

    Responding to a question by Senator Yusuf Abubakar Yusuf on why the CIT rate has remained at 30 per cent, Fowler said: “My personal opinion is that the rate of CIT should remain at 30 per cent, to make sure that we do not reduce the tax rate, without getting others who are not in the tax net into the tax net.

    But for small businesses, it’s a discussion we are having with the Ministry of Finance for people who are having a certain turnover. I believe that that can be reduced to may be 20 per cent to promote the small-scale businesses. But in terms of immediate reduction, I think we should try and stabilize to ensure a 90 per cent compliance of those in the tax net.”

  • Manufacturing sector generates N864b in VAT – NBS

    Manufacturing sector generates N864b in VAT – NBS

    The manufacturing sector contributed about N864 billion of the N3.63 trillion generated as Value Added Tax (VAT) from 2013 to 2018, National Bureau of Statistics (NBS) reported has indicated.

    The agency, which stated this in its latest report titled: Sectoral Distribution of VAT in Q4, 2018 reported that the sector’s contribution represented 24 per cent of the total VAT generated within the six-year period.

    An analysis of the VAT accruals on yearly collection basis showed that N481.5 billion was collected by the Federal Inland Revenue Service (FIRS) in 2013 compared to the N493.9 billion generated in 2014.

    In 2015, the report indicated that N759.4 billion was raked in by the Service from the revenue source while N777.51 billion was collected as VAT by it in 2016. The NBS reported N972.35 billion VAT accrual in 2017 and N1.10 trillion in 2018.

    According to the official statistics producing and reporting agency, the manufacturing sector has eight sectoral activities among the 28 sectoral categories from which the N864 billion VAT derived.

    The report listed the manufacturing sector’s sectoral activities as automobiles and assemblies, breweries, bottling and beverages; as well as chemicals, paints and allied industries. Others are, other manufacturing, petrochemical and petroleum refineries; pharmaceutical, soaps and toiletries; publishing, printing and paper packaging; and textile and garment industries.

    A further breakdown of the real sector’s VAT in the six-year period on sector by sector basis showed that the automobiles and assemblies contributed N8,691,597,713.42; breweries, bottling and beverages generated N192,028,180,262; and chemicals, paints and allied industries raked in N6,989,648,842.73.

    Other manufacturing contributed N597,005,133,563, while petrochemical and petroleum refineries raked in N37,013,858,414.6, and pharmaceutical, soaps and toiletries provided N7,131,243,714.78 to the VAT collections.

    In addition, publishing, printing, paper packaging contributed N9,685,665,303.04, while textile and garment industry generated N5,501,007,456.24 to the VAT in the six-year period.

  • Nigeria generated N298bn from VAT in Q4, 2018 – NBS

    Nigeria generated N298bn from VAT in Q4, 2018 – NBS

    The National Bureau of Statistics (NBS) said Nigeria generated N298.01 billion from Value Added Tax in the fourth quarter, 2018.

    NBS said this in a Sectoral Distribution of VAT report for the fourth quarter, 2018 posted on its website.

    The News Agency of Nigeria reports that VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

    The report said that the figures in the quarter under review rose by 8.96 per cent quarter-on-quarter and by 17.28 per cent year-on-year.

    It said the sum of N298.01 billion was generated as VAT in fourth quarter 2018, as against N273.50 billion generated in third quarter 2018, and N266.73 billion in the second quarter, 2018.

    According to the report, the manufacturing sector generated the highest amount of N28.82 billion VAT.

    This, the report said, was closely followed by Professional Services generating N24.12 billion, while Commercial and Trading generating N16.02 billion.

    Also, it said the mining sector generated the least amount of N35.75 million, Pharmaceutical N209.33 million, while Chemical and Allied Industries generated N258.39 million.

    The report said N138.42 billion was generated as Non-Import VAT locally, while N47.89 billion was generated as VAT for foreign items in the quarter under review.

    The bureau, however, said that the balance of N111.71 billion was generated as Nigeria-Customs Import VAT in the period under review.

    The data for the report was provided by the Federal Inland Revenue Service, verified, and validated by the NBS.

     

  • Manufacturing sector tops contribution to N273bn VAT generated in Q3 – NBS

    Manufacturing sector tops contribution to N273bn VAT generated in Q3 – NBS

    The manufacturing sector had the highest contribution to the Value Added Tax generated in the third quarter of 2018, the latest data obtained from the National Bureau of Statistics (NBS) on Tuesday revealed.

    The figures, showed that the VAT generated in Q3 rose to N273.5bn.

    The NBS said, “Sectoral distribution of Value Added Tax data for Q2 and Q3 2018 reflected that the sum of N273.5bn was generated as VAT in Q3 2018 as against N266.73bn generated in Q2 2018 and N269.79bn in Q1 2018 representing 2.54 per cent increase Quarter-on-Quarter and 9.16 per cent increase Year-on-Year.”

    It added that, “Other manufacturing generated the highest amount of VAT totalling N31.48bn and closely followed by professional services and commercial and trading both generating N25.57bn and N15.99bn respectively; while mining generated the least and closely followed by pharmaceutical, soaps & toiletries and textile and automobiles & assemblies with N52.70m, N177.34m and N265.35m generated respectively.”

    Out of the total amount generated in Q3 2018, N128.62bn was generated as non-import VAT locally while N58.84bn was generated as non-import VAT for foreign.

    The balance of N86.04bn was generated as NCS-Import VAT in Q3 2018, according to the NBS.

    VAT from automobiles and assemblies fell to N265.35m in Q3 2018, from N488.76m in Q2 and N441.66m in Q1.

    The data, further revealed that breweries, bottling and beverages generated N7.82bn VAT in Q3, from a figure of N9.43bn in Q2 and N8.88bn in Q1.

    The building and construction sector generated N2.37bn VAT in Q3 2018, from N2.67bn in Q2 and N2.38bn in Q1 respectively.

    Chemicals, paints and allied industries generated N393.03m VAT in Q3 2018, from N317.15m in Q2 and N420.85m in Q1 respectively.

     

  • Why I ordered removal of VAT from domestic air fares – Buhari

    President Muhammadu Buhari says the recent decision by the Federal Government to remove Value Added Tax (VAT) from domestic air transportation is to make air travel more affordable to citizens.
    The president said this when he inaugurated the new International Terminal of Port Harcourt Airport, Omagwa, Rivers, on Thursday.
    He said the removal of the VAT was also meant to create job opportunities in the nation’s aviation sector.
    The president also explained that the government’s decision to charge zero VAT from domestic air transportation was in line with global best practices.
    “This will make air travel more affordable and subsequently lead to the creation of jobs by the air transport service value chain as well as increase revenues for government.
    “Today’s commissioning is an example of Government’s deliberate policy to sustain the development of infrastructure for economic growth in all geo-political zones of the country,’’ he said.
    The president said that the inauguration of the terminal was a response to global trend in which aviation had became a catalyst for economic growth as a result of massive and speedy movement of persons, goods and services in a safe and secure manner.
    “Following the large increase in national population with consequent surge in air passenger traffic, the capacity of the airport terminals became woefully inadequate to cater for the increase in passenger traffic.
    “Although, palliative measures were periodically carried out, the facilities were fast giving-in to the effects of wear and tear.
    “It, therefore, became necessary to take decisive action to ensure our terminals meet minimum international standards for the travelling public.
    “As part of the infrastructure renewal programme, the construction of four new international terminals at Abuja, Lagos, Port Harcourt and Kano airports was embarked upon by the Federal Government with a view to modernising the aging airport infrastructure.”
    The president said that this was to meet global aviation standards and improved service delivery in tandem with best international practices.
    He said that Nigeria having an advantageous central location within the sub-region and its desire to develop into a regional air transportation hub, must upgrade its facilities to take advantage of its assets.
    Mr Buhari also said that the inauguration of the terminal was part of his administration’s promise to upgrade and develop Nigeria’s transport, power and health infrastructure, and complete a number of stalled infrastructure projects.
    He said the promise included the construction of new terminals at the country’s five major airports, numerous major road projects, key power transmission projects and the completion of the Kaduna – Abuja as well as Itakpe to Warri Railway lines.
    President Buhari commended the people of the South-south region and airport users for their patience during the period of the construction.
    He also lauded the efforts of the Federal Ministry of Transportation, particularly the Aviation, the Chinese government and the China Exim Bank for their financial support and the various roles they played leading to the successful completion of the project.
     

  • Okowa presents N367bn 2019 budget proposal to Delta Assembly

    Gov. Ifeanyi Okowa of Delta on Wednesday presented a budget estimate of N367.09 billion for the 2019 fiscal year to the State House of Assembly for approval.
    Presenting the budget christened, “Budget of Sustainable Growth,” Okowa said it was made up of N157.09 billion and N209.99 billion Recurrent and Capital Expenditures respectively.
    The proposed budget is N58.20 billion higher than the 2018 budget of N308.88.
    According to the governor, the 2019 recurrent expenditure is higher than that of 2018 by N9.823 billion
    “The proposed capital estimate for 2019 is N209 billion is N48.3 billion or 29.9 per cent higher than that of 2018 capital budget of N161.6 billion,” he stated.
    He said that in order to achieve the proposed target, government would intensify enforcement of appropriate tax legislation to increase the tax base to N73.4 billion annually.
    Okowa said that the budget would be funded through an expected statutory allocation of N217.89 billion, a Value Added Tax, (VAT) of N13.05 billion and other capital receipts of N62.73 billion.
    The governor highlighted other sources of funding for the proposed budget to include Internally Generated Revenue (IGR) of N73.4 billion, representing 20.77 per cent of the total projected revenue.
    A breakdown of the budget showed that N79.6 billion was allocated for roads, N2.9 billion for agriculture, N3.9 billion for sports development and N1.1 billion for jobs creation.
    Water resources got N1.6 billion with health and education getting N8.6 billion and N26.8 billion respectively.
    “We have christened it a budget of sustainable growth, because the year 2018 witnessed a significant improvement in our revenue receipt; it is our hope that this trend is sustained in 2019.
    “Our expenditure profile from January to June, 2018, showed that N66.5 billion was spent on recurrent items as against a proportionate approved budget of N73.7 billion, representing a budget performance of 94.4 per cent.
    “Also, N161.6 billion was budgeted for capital expenditure in the same period, with N38.6 billion spent as against N80.8 billion, representing a performance of 47.8 per cent,” he said.
    The governor said though capital expenditure performance was not a true reflection of performance, better performance was being expected in the third and the fourth quarters of 2018.
    “The first three budgets of this administration were largely centered on charting five main pathways critical to actualising our reform agenda of job and wealth creation.
    “The proposed 2019 budget will consolidate, expand and deepen the process as we pursue our transformation goal of building a strong diversified and inclusive economy,” he said.
    Receiving the budget proposal, the Speaker, Sheriff Oborevwori, lauded its timely presentation.
    Oborevwori assured the people of the state that the legislature would do justice to the proposal and give it accelerated passage.
     

  • Nigeria generates N254.10bn from VAT in Q4 2017– NBS

    Nigeria generates N254.10bn from VAT in Q4 2017– NBS

    The National Bureau of Statistics (NBS) on Thursday declared that the country generated N254.10 billion as Value Added Tax in fourth quarter of 2017.

    VAT is a type of general consumption tax that is collected incrementally, based on the increase in value of a product or service at each stage of production or distribution.

    The NBS stated this in its “ Sectoral Distribution of VAT Data for fourth quarter, 2017’’ posted on its website.

    The bureau stated that the N254.10 billion VAT collected in the fourth quarter was higher when compared with the N250.56 billion generated in third quarter of 2017, and N207.35 billion in fourth quarter 2016.

    The figure represented 1.41 per cent increase quarter-on-quarter and 22.55 per cent increase year-on-year, the report indicated.

    According to the report, manufacturing sector generated the highest amount of N28.19 billion, closely followed by Professional Services and Commercial and Trading, both generating N22.34 billion and N12.87 billion respectively.

    It stated that the mining sector generated the least figure of N32.51 million.

    The Pharmaceutical, Soaps and toiletries, however, garnered N177.19 million VAT, and local government councils generated N201.12 million.

    The report said out of the total amounted generated in fourth quarter of 2017, N121. 09 billion was generated as Non-Import VAT locally, while N79.44 billion was generated as Non-Import VAT for foreign.

    It added that N53.57 billion was generated as Nigeria Customs Service -Import VAT.

  • N246.30bn generated as VAT in second quarter — NBS

    N246.30bn generated as VAT in second quarter — NBS

    The National Bureau of Statistics (NBS) says that N246.30 billion was generated as Value Added Tax (VAT) in the second quarter of the year.

    The bureau gave the figure in its `Sectoral Distribution of Value Added Tax’’ for the Second Quarter released on Friday in Abuja.

    It stated that the value generated in the quarter was greater than N204.77 billion generated in the first quarter of the year and N187.03 billion realised in the second quarter of 2016.

    It said the value represented a 20.28 per cent increase quarter-on-quarter and 31.69 per cent increase year-on-year.

    According to the bureau, the manufacturing sector generated the highest amount of VAT with N33.69 billion, closely followed by professional services and oil producing of N21.64 billion and N14.94 billion respectively.

    It said the mining sector generated the least and closely followed by local government councils and pharmaceutical, soaps and toiletries with N34.19 million, N154.72 million and N194.26 million in that order.

    It noted that out of the total amount generated in the second quarter, N137.79 billion was realised as Non-Import VAT locally, while N59.83 billion was generated as Non-Import VAT for foreign.

    It further said the balance of N48.68 billion was generated as Nigeria Customs Service Import VAT.

  • 55% of Nigeria’s VAT comes from Lagos tax payers – Adeosun

    55% of Nigeria’s VAT comes from Lagos tax payers – Adeosun

    The Minister of Finance, Kemi Adeosun on Tuesday said 55 percent of Nigeria’s Value added tax (VAT), comes from tax payers in Lagos State.

    Adeosun made this known while speaking at a parley between the Federal Government and Progressive Governors forum in Abuja.

    She noted the 87 percent of Nigeria’s VAT was derived from five states including the Federal Capital Territory (FCT), while 13 percent of Nigeria’s VAT comes from 32 other states in the federation.

    “There is no poor country that has a high tax compliance rate, and no rich country that has a low one,” Adeosun said.

    “55% of Nigeria’s VAT was collected in Lagos State; FCT, 20%; Rivers, 6%; Kano, 5%; and Kaduna, 1%, I’m hoping that one day, finance commissioners will stop needing to come to Abuja monthly to share FAAC, because IGR (internally generated revenue) will be sufficient.”

    The Minister also urged the states to do more to generate revenue and not solely depend on the federal government for federal allocation, while stating that the country’s abysmal tax-to-GDP ratio is at six percent, which happens to be one of the lowest in the world.