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Nigeria’s Tax To GDP Ratio At 6.1% And A Tax Base For VAT Hits N23.7 Trillion

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Nigeria recorded a total tax collection of about N8.8 trillion in 2020. This is a true representation of a 6.1% tax to GDP ratio. However, the total taxes collected include oil and non-oil tax plus taxes collected by states. According to data collated from the FG and States taxes for 2019, Nigeria had a nominal GDP of N145.6 trillion (Dec 2019). 

According to the National Bureau of Statistics (NBS), the following data was published from the 2019 Budget Implementation report and the 2019 IGR report and Entrepreneurs.ng has these to say: 

Value Added Tax (VAT)

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Nigeria projected a total VAT revenue of N1.7 trillion as it anticipated higher tax revenues from vatable goods and services. It will please you to know that VAT is collected by the Federal Inland Revenue Service and by law businesses who charge VAT are expected to remit the same to the government. However, this is after netting off the VAT they paid on supplies (input VAT) which is derived from sales proceed (output VAT).

According to the data, Nigeria had a negative variance of N515 billion or 30%. In the year under review, Nigeria collected a VAT of N1.18 billion compared to a budget of N1.7 trillion. 

The total transaction base for VAT in the country in 2019 was N23.77 trillion or 16.2% of GDP. Nigeria’s total nominal GDP was N145.6 trillion.

In 2019 invoices were charged 5% which was the N23.77 trillion upon which VAT was charged and remitted. Recall, that in 2018, the government earned a total VAT revenue of N1.09 trillion. Putting this in context means there was a transaction base of N21.8 trillion. However, Nigeria’s VAT transaction base has risen by N1.98 trillion or 9% year on year (2018 & 2019). In a nutshell, Nigeria increased its VAT rate to 7.5% in 2020.

Corporate Tax

According to the budget implementation report, a total of N1.51 trillion was collected as corporate tax in 2019 compared to a budget of N1.76 trillion.

The total profits upon which Nigerian companies paid tax on was at a 30% corporate tax rate and had a total tax base of N5.08 trillion.

Total Tax

Nigeria collected total non-oil taxes of N3.54 trillion in 2019. It comprises of N1.51 trillion (Corporate Taxes), N1.88 trillion (VAT), N792 billion (Customs, import, fees, and excise duties). In a nutshell, the total oil taxes and royalties in 2019 were N4 trillion

Data from the National Bureau of Statistics has it that, state governments collected a total taxes of N1.33 trillion. This includes PAYE (N809.23 billion), Direct Assessment (N47.6 billion), Road taxes (N30.2billion), other taxes (N225.4 billion), and MDA revenues of N221.5 billion.

The official published tax figures for Nigeria (Federal and States) total taxes collected in 2020 is about N8.88 trillion. However, Nigeria has a 6.1% tax to GDP ratio. It is regarded as one of the lowest in the World as at 2020. 

Compared To Other Developed Countries

Data has it that the Organization for Economic Co-operation and Development (OECD) has an average tax to GDP ratio of about 32.9% on the average.

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