The total Value Added Tax (VAT) collected between January and March 2020 as reported by the National Bureau of Statistics was N338.94 billion, a growth of 10 per cent when compared to N308.48 billion collected in the last quarter of 2019. The VAT generated in the first quarter of 2020 is the highest since NBS began publishing the data in 2013. On a y/y basis, VAT revenue grew 16 per cent, largely driven by VAT on locally produced goods (up 26% y/y to N172.67bn). The increase is attributable to the 50 per cent hike in Value Added Tax (VAT) from 5% to 7.5% that took effect on February 1.
Further breakdown of the data showed that VAT on locally produced goods (i.e. Non-Import VAT) contributed the most at 51% while VAT on imported goods (i.e. Import VAT) contributed 21%. From a sectoral perspective, the highest contributing sectors to Local VAT revenue were Professional services (22%), Other manufacturing (22%), Commercial and trading (10%), Breweries, bottling and beverages (8%) and State Ministries & Parastatals (6%). Local government councils (0.18%), Textile & garment industry (0.18%) and mining (0.04%) had the lowest contribution.
However, as demand weakens due to the reduction in income levels, job losses brought about by the global pandemic, the ban on social gatherings, closure of hotels and bars will reduce the consumption of soft drinks and beer, exerting further pressure on VAT levied on locally produced goods. Also the growth in VAT on imported goods will be constrained by the disruption to the global supply chain, as importers and manufacturers cut back on purchasing plans in response to the slowdown in demand for goods and services.