Government revenue on VAT from banks, other financial institutions drops 26% in Q1
by BUNMI BAILEY
May 21, 2018 | 1:36 am| | | Start Conversation
Government revenue from VAT, that comes from banks and other financial institutions declined (year-on-year) by 26.4 percent in the first quarter of 2018, according to the National Bureau of Statistics (NBS) report of the Sectorial distribution of VAT
BusinessDay analysis of the VAT data from the NBS report shows that VAT revenues from the banks and financial institutions dropped by 26.4 percent to N5.3 billion in Q1 2018 from N7.2 billion in Q1 2017
Analysts have attributed this to the most of the financial services being done online,
“It could only be that banks have shifted from normal banking hall transactions to online bank transactions. Banks are now leveraging on fintech to carry out their transactions,” Johnson Chukwu, CEO of Lagos-based financial advisory firm, Cowry Assets, said on phone
“On year on year, from Q2 2017 you are looking at some level of economy recovery. And as a result a lot of financial services are being done online,” Chukwu, further added
Also the banks have said that they were not making enough activities as they did before
Stephen Nejo, a banker, said, “Banks were making enough transactions as before”.
VAT is the world’s most common form of consumption tax. It is a tax that is levied on the supply of most goods and services and on the importation of goods.
According to the Value Added Tax Act Cap V1 LFN 2004 (as amended), all banks and financial institutions, except Community banks, Peoples bank and Mortgage institutions are required to charge VAT on services rendered by them to their customers and account for same to the Federal Inland Revenue Service.
Also from the report, the total sectorial VAT data for Q1 2018 reflected that the sum of N269.8billion was generated as VAT in Q1 2018 as against N254.1 billion generated in Q4 2017 and N221.4billion in Q1 2017 representing 6.2 percent increase (Quarter-on-Quarter) and 21.9 increase (Year-on-Year)
Other manufacturing generated the highest amount of VAT with N30.1 billion generated and closely followed by Professional Services and Commercial and Trading both generating N16.6 billion and N14.9 billion respectively while Mining generated the least and closely followed by Pharmaceutical, Soaps & Toiletries and Textile and Garment industry with N46.2 million, N243.44 million and N285.43 million generated respectively.
Out of the total amounted generated in Q1 2018, N121.4 billion was generated as Non-Import VAT locally while N98.4 billion was generated as Non-Import VAT for foreign. The balance of N50 billion was generated as NCS-Import VAT.
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