Nigeria collects N1.78 trillion in Value Added Tax (VAT) during the third quarter of 2024, marking a significant milestone in its tax revenue drive. This represents a 14.16% increase from the N1.56 trillion recorded in the second quarter of 2024 and an impressive 88% rise compared to the third quarter of 2023.
Breakdown of VAT Revenue
The VAT revenue for the quarter comes from three main sources:
- Local VAT Payments: N922.87 billion
- Foreign VAT Payments: N448.85 billion
- Import VAT: N410.62 billion
The human health and social work sector shows the highest quarter-on-quarter growth at 250.39%, followed by household activities with 102.09%. However, some sectors record declines:
- Water supply and waste management: decreases by 41.92%
- Extraterritorial organizations and bodies: declines by 36.14%
Leading Sectors by Contribution
The sectors contributing the most to VAT revenue in Q3 2024 are:
- Manufacturing: 22.21%
- Information and Communication: 20.89%
- Mining and Quarrying: 18.90%
On the lower end, household employer activities and extraterritorial organizations each contribute 0.01%, while water supply and waste management accounts for 0.03%.
Significant Revenue Growth
The 88% year-on-year growth highlights the government’s success in strengthening tax administration and compliance measures. This improvement supports efforts to increase non-oil revenue and boost fiscal stability.
Debate Over Revenue Allocation
The rise in VAT revenue comes amid discussions on proposed reforms to the revenue-sharing formula. The new tax reform bills under consideration suggest using a derivation principle for VAT allocation, which could shift the current distribution model:
- Federal Government: 15%
- States and FCT: 50%
- Local Governments: 35%
Currently, 20% of state and local government shares incorporate derivation, while other factors like population and equality play a role in distribution.
Regional Resistance to Reforms
Governors from Northern states, traditional leaders, and other stakeholders express concerns about the proposed changes. Many argue that the derivation-based formula may disproportionately affect certain regions.
Nigeria’s VAT growth reflects its commitment to improving revenue generation. As debates over equitable distribution continue, the government seeks to balance economic progress with regional interests.
 during the third quarter of 2024, marking a significant milestone in its tax revenue drive. This represents a 14.16% increase from the N1.56 trillion recorded in the second quarter of 2024 and an impressive 88% rise compared to the third quarter of 2023.){kind=link}