In the fourth quarter of 2024, Nigeria’s Ministries, Departments, and Agencies paid N7.04 billion in Value Added Tax to the Federal Inland Revenue Service.
This is according to daily data gathered from BudgIT’s accountability platform, GovSpend.
The breakdown of this money revealed N4.13 billion in October and N2.91 billion in November, with no payments made in December. The total amount for the quarter was N7,038,301,823.65, demonstrating the sustained importance of VAT in Nigeria’s tax collection.
According to the Federal Inland Revenue Service, VAT in Nigeria is imposed at a rate of 7.5% on goods and services, with some exceptions, such as non-oil exports, which are zero-rated. “Value Added Tax is a consumption tax levied when products are purchased and services are provided. It is a multi-stage tax, with VAT payable by the final customer,” stated the FIRS.
The agency also emphasized the need for some taxpayers to remit VAT, such as Nigerian enterprises that do business with non-residents, government agencies, and oil and gas corporations.
Payments in October and November included remittances from the Federal Ministry of Works, which contributed millions in VAT on construction contracts. Notable payments in October were N24.98 million for Ultrateam Projects Design & Construction Ltd. and N18.79 million for Bkem Consults Ltd.
Similarly, Gillan Construction Ltd. paid N97.73 million in November, as did Centrebeam Construction Ltd. for N46.67 million. In 2024, FIRS Chairman Zacch Adedeji highlighted the agency’s continuous efforts to increase tax collection, particularly by expanding the scope of VAT collection to cover non-resident providers like as Google and Amazon.
“At the FIRS, we look at policy issues. “We now collect tax from non-resident resource suppliers such as Google and Amazon,” he explained.
The FIRS has also worked with the United Nations Development Programme to identify and eliminate VAT gaps, with the goal of raising N5 trillion from VAT by the end of 2024.
Meanwhile, the federal government continues to advocate for tax reforms that broaden the revenue base and improve compliance.
Mohammed Adoke, a former Attorney General and Senior Advocate of Nigeria, emphasized the significance of taxation, saying, “Taxation is an indispensable tool for governments worldwide to raise revenue and promote economic development.”
He also cited Nigeria’s tax system’s shortcomings, such as poor voluntary compliance and administrative inefficiencies.
The government has suggested many reforms, including the Revenue Reform Bills 2024, to improve the country’s tax system and ensure long-term revenue for development.