FG May Increase VAT Rate By Additional 2.5% In 2021

 

Federal Government on Tuesday disclosed that it has spent N7.09 trillion as at the end of the third quarter of 2020 fiscal year, just as it unveiled plans to introduce additional 2.5% Value Added Tax (VAT) rate in 2021 fiscal year as part of efforts aimed at increasing revenue generation.

Minister of Finance, Budget and National Planning, Dr Zainab Ahmed disclosed this while presenting the overview of the 2020 fiscal outcomes and budget implementation/2021 budget defence to the House Committee on Finance, chaired by Hon. James Faleke.

According to documents presented to the Committee, as at the end of Q3 2020, Federal Government’s revenue available for budget funding (excluding GOEs) was N2.83 trillion, 70% of target. Federal Government share of oil revenues was N1.203 trillion (representing 158% performance, over and above the prorated sum in the revised 2020 budget) while non-oil tax revenues totalled N927.47 billion (76% of revised target).

Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N486.68 billion and N137.03 billion, representing 79% and 64% respectively of the prorate revised targets for the period. Customs collections were N303.76 billion (78% of revised target). Other revenues amounted to N697.75 billion, of which independent revenues was N390.50 billion.

On the expenditure side, N9.97 trillion was appropriated (excluding GOEs and project tied loans), while N7.09 trillion (representing 94.7% of the prorate N7.48 trillion) was spent. Of the expenditure, N2.54 trillion was for debt service and N2.43 trillion for personnel cost, including pensions. As at end of September 2020, N873.9 billion had been released for capital expenditure.

“Mr. President has approved that the Oronsoye report be implemented and has directed the SGF and Head of Service to carry out that process. Many agencies have come on stream and the size of government expenses has increased. The essence is to cut down expenses by fusing some Agencies and reducing the number of agencies we have.

“The 2021 budget of the Ministry of Finance is about automation to enhance the efficiency of revenue collection in the agencies. Very soon we will be. Currently, we have an automation process that enables us to capture the revenue. We have monthly reconciliation exercise in all the major agencies to confirm that the revenue as reported are complete. We set up the National Social Investment Programme, N279.10 billion has so far been released,” the Minister noted.