The National Bureau of Statistics (NBS) has reported a significant surge in Value Added Tax (VAT) collections in the fourth quarter of 2023, reaching NGN1.20 trillion. This marks a remarkable increase of 26.61% quarter-on-quarter compared to Q3-23, which recorded NGN948.07 billion in VAT collections.
The total VAT collections for the fiscal year 2023 amounted to NGN3.64 trillion, compared to NGN2.51 trillion in the previous fiscal year. This surge is attributed to several factors including a spike in prices of goods and services, continued enhancement in the automation of the country’s tax administration processes, and currency depreciation affecting foreign VAT collections.
VAT collections witnessed growth across all segments, with local collections rising by 20.67% quarter-on-quarter to NGN630.00 billion, NCS-import collections increasing by 10.22% quarter-on-quarter to NGN244.04 billion, and foreign collections soaring by 59.48% quarter-on-quarter to NGN326.27 billion.
On a year-on-year basis, VAT collections experienced a substantial jump of 72.12%, with Q4-22 recording NGN697.38 billion. Despite constraints on domestic demand due to consumer wallets, analysts anticipate that VAT collections will remain robust.
The depreciation of the naira is expected to influence foreign collections in the short term, particularly in Q1-24. However, the rise in prices of goods and services is projected to sustain increases in local collections. Consequently, experts anticipate that the combined impact of higher VAT and Corporate Income Tax (CIT) collections will bolster the Federal Government’s non-oil revenue over the short-to-medium term.ikely to influence market dynamics in the coming week.
