Dissecting The Source Of Nigerian VAT As At Q4 -17

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The Nigerian Bureau of Statistics recently published data on the sectoral distribution of Value Added Tax (VAT) for Q4-17. Therein, we observed that total amount generated from VAT had increased by 25.1%y/y from N7.8tn in 2016 to N9.7tn in 2017. Taking a closer look at the three major sources of VAT, locally sourced VAT edged 7.7%y/y, Nigeria Customs Service-Import VAT increased 13.6%y/y while Non-import (Foreign) VAT surged 106.7%y/y.

Dissecting The Source Of Nigerian VAT As At Q4 -17 - Brand Spur

However, the locally sourced VAT has declined consecutively q/q by 9.2% in Q3-17 and 3.2% in Q4-17 respectively, while Non-import (foreign VAT) increased 20.5% and 10.2% in Q3-17 and Q4-17 respectively. Also, between Q1-17 and Q4-17, the percentage contribution of locally sourced VAT has declined steadily from 61.8% to 47.7% while the contribution of non-import (foreign) has increased steadily from 15.5% to 31.3% respectively. This indicates that foreign sourced VAT has started out crowding locally sourced VAT

On a positive note, increasing total VAT buttresses the recent optimism in the broader economy amid increasing level of consumption expenditure as well as a renewed appetite for foreign-sourced goods and services, buoyed by currency market reforms implemented in Q2-17. Nevertheless, we recommend that tax authorities explore deeply, local value chains, especially among the yet to be captured SMEs, to boost locally sourced VAT.

Read Also:  ACCOUNTING FOR VAT IN NIGERIA – CASH OR ACCRUAL BASIS?
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