VAT, oil, companies, account for 94% of FG’s N2.5trn H1 revenue

Federally collected revenue from oil companies as petroleum profit tax (PPT), company income tax (CIT) and value added tax (VAT) accounted for N2.5 trillion of the total money that entered the Federal Government’s coffers for the first half of this year, investigations have shown.

The amount represents 94.2 percent of the total revenue of N2.5 trillion from other sources, such as stamp duties, capital gains tax and stamp duties, among others.

Analysts said yesterday that the development is positive for government, considering increasing complaints relating to doing business in Nigeria and vandalisation of oil pipelines, but

emphasised  the need for judicious application of these funds, in line with the 2014 bugdet expenditure.

They also see the level of the revenue being a result of improved efforts of the Federal Inland Revenue Service (FIRS) in increasingly blocking revenue loopholes.

Further analysis by BusinessDay show that PPT accounted for N1.2 trillion, CIT, N751 billion and VAT, accounted for N406 billion.

Petroleum Profit Tax (PPT) is paid by companies engaged in petroleum exploration and production operations in Nigeria (up-stream operations).

Others that pay similar taxes are persons resident in Nigeria, employed in the management of the petroleum operations carried on by  non-resident companies; and the liquidator, receiver, or agent of liquidator or receiver of any company carrying on petroleum operations in Nigeria.

A breakdown of this revenue shows that in January 2014, N190.01billion came into the Federal Government’s coffers as Petroleum Profit Tax; in February it was N268.207billion; while in March, it stood at N178.832billion.

Also, in April, N177.2billion was collected by the Federal Government as Petroleum Profit Tax; in May it was N215.63billion; while in June, Petroleum Profit Tax revenue was put at N246.43billion by the Federal Inland Revenue Service (FIRS).  

In addition to PPT, the Federal Government’s spending power got boosted with N751.5 billion which companies paid as income tax.

Details show that in the month of January, companies paid N80.609billion as income tax; while in February, the Federal Inland Revenue swelled the Federal Government’s purse with N56.488billion it collected as companies’ income tax.

Further checks show that in March, N58.121billion was collected from companies as income tax; in April, no fewer than N60.559billion was collected from companies as income tax; in May, N280.63billion was collected by the FIRS from companies as income tax; while in June, N215.06billion was paid by companies as income tax.

Companies income tax (CIT) applies to all companies incorporated in Nigeria, with the exception of companies engaged in petroleum operations; and all non-resident (foreign) companies that earn or derive income from Nigeria.

In addition, its applies to all organisations limited by guarantee (institutions of public character or charitable organisations) engaged in profit making activities, other than the promotion of their primary objects; and the liquidator, receiver, or agent of liquidator or receiver of any taxable company or organisation.

Some time ago, at the FIRS regional enlarged management meeting (REMM) held in Lagos, Kabir Mashi, acting executive chairman, Federal Inland Revenue Service (FIRS), insisted on its staff raising the ante in tax revenue collection, saying that such increase would help to narrow the gap between the tax revenue collection and Nigeria’s Gross Domestic Product (GDP).

Also, the Federal Government raked-in in excess of N406.14billion as Value Added Tax (VAT) in the period under review. This includes: Nigeria Customs Service –import VAT, and non-import VAT.

A monthly breakdown shows that in January, N78.773billion went to government coffers as VAT; in February, it was N66.801billion; while in March, N63.307billion was collected as VAT by FIRS.  

Value Added Tax is subjected to any individual, corporation sole, group, corporate body or organisation that consumes, buys, procures or imports taxable goods or services.  During direct sales or open market transactions, the buyer or consumer of taxable goods pays the tax to the seller, along with the cost of the goods or services bought.   

In April 2014, the FIRS collected N65.43billion as VAT; in May, N65.415billion came into the Federal Government’s revenue basket as VAT; while in June, VAT collected rose to N66.414billion.

BusinessDay