FG Ministries, Parastatals VAT Collection Drops By N1.386 Billion In One Year

Federal ministries and parastatals recorded   a decline in Value Added Tax (VAT) collection by N1.386 billion, from N7.937 billion in Q1 2019,   to N6.551 billion in Q1 2020, representing a 17.5% decline..

According to a National Bureau of Statistics   report, the Federal ministries and parastatals’ contribution to the net VAT for Q1 2020 represents 1.93% of N338.936 billion collected..

Between Q4 2019 and Q1 2020,  the VAT for the sub- sector fell by   N3.169 billion
  from N9.721 billion in Q4 2019  to N6.551 billion in Q1 2020.

Meanwhile, state ministries and parastatals collected N10.663 billion VAT  in Q1 2020, 32.46% up from N8.050 billion recorded in Q1 2019.

Describing VAT for government ministries and parastatals,  the Federal Inland Revenue Service (FIRS) said, “As consumers of goods and services, ministries, parastatals and other agencies of government pay VAT on their consumption in addition to the contract price of the item consumed by them and, for the contractor to render monthly returns, Government agencies must obtain receipts from FIRS for the VAT paid on behalf of the contractors.”

Nigeria’s VAT was charged at 5%, but the federal government raised it  to 7.5% on February 1 2020, a move aimed at boosting government’s revenue to fund the country’s 2020 budget deficit.

The federal government in a document sent to the International Monetary Fund (IMF) projected a N195. 582 billion fall in VAT revenue for 2020 to N933 billion, from N1.189 trillion recorded in 2019.