Citing the relaxation of COVID-19 restrictions, analysts at Cowry Asset Management Limited have said that the Federal Government will likely rake in more revenue from Value Added Tax (VAT) in the second half of this year compared with the amount it generated in H1’20. The analysts made the prediction in the latest edi-tion of the firm’s “Cowry Weekly Financial Markets Review and Outlook” report obtained by New Telegraph.
According to data released by the National Bureau of Statistics (NBS) last week, total VAT collected in H1’20 rose by 8.45 per cent to N651.77 billion, from N600.98 billion in H1’19, due to implementation of the 50 per cent increase in the VAT rate to 7.5 per cent, which commenced in February 2020.
Specifically, the NBS data indicates that of the N651.77 billion generated in H1’20, N335.82 billion (51.52 per cent) was collected as non- import VAT locally, N161.74 billion (24.82per cent) was generated as nonimport (foreign) VAT, while import VAT received by the Nigerian Custom Service (NCS) was N154.21 billion (23.66 per cent). Commenting on the NBS numbers, the analysts said: “We expect to see inflow from the VAT line of federally collected revenue to further rise in H2’20 as the negative effect of COVID-19 on economic activities eased at the end of Q2’20 amid relaxation of restriction on movement by the Federal Government. “Howbeit, the 50 per cent rise in VAT partly impacted the purchasing power of citizens as inflation climbed higher to 12.56per cent in the month of June.”