The NBS released the sectoral distribution of Value Added Tax (VAT) data for Q3-2020. The data reveals that the sum of N424.7bn was generated as VAT in Q3-2020, implying a 29.8% increase on q/q basis and 54.4% increase on y/y basis.
Other manufacturing and professional services recorded the highest contribution to VAT in the NBS report, growing by 55.1% and 37.1% y/y respectively. Professional services grew by 16.9% q/q in Q3-2020 after declining by 1.7% q/q in Q2-2020. Lockdown affected earnings in Q2-2020. The impact of COVID-19 can also be seen in the decline in Q2-2020 receipts for other manufacturing where VAT receipts declined by 19.0% in Q2-2020 to N30.0bn. However, in Q3-2020 VAT receipts rose to N47.0bn as lockdowns eased. In 2019, the FGN Increased VAT from 5.0% to 7.50% and the increasing VAT receipts is good news for the country’s fiscal authorities as It implies increased revenue allocations for the Federation Account Allocation Committee (FAAC).
Earlier, the CBN had adjusted the conversion rate of the proceeds from NNPC’s oil revenue to N379/$1 from N306/$1. The impact of these changes would be more pronounced in a post-COVID Nigeria.
The FAAC disbursed the sum of N682.6bn in September 2020 which is c.2.0% less than in the corresponding period in 2019. Certainly, this is a relatively good return considering the expected lower turnout from Nigeria Customs Revenue and NNPC remittances. The VAT contribution in the period was about N150.0bn, which is up 60.0% from 2019