Value added tax popularly referred to as VAT is a kind of tax levied on goods and services. It operates in such a way that whenever you buy a good or engage the services of any person or company, you get to pay it.

It is common knowledge that Nigeria consumes more than it produces. This is probably why our VAT remains extremely viable at the rate of 5%. It is however interesting to note that people do not feel the burden of this tax while paying for it. The reason for this to my mind is that:

  1. The rate of VAT in Nigeria is arguably one of the lowest VAT rates in the world.
  2. This tax erates through the value chain in such a way that the end consumer in the value chain bears the burden of the tax without actually realizing it. 

MY CASE

So much has been and is being said about diversifying the Nigerian economy to more sustainable sources of government revenue in view of the ever fluctuating oil prices in the international market. This has placed a huge, although not adequate, searchlight on tax revenue so that the government is doing all within its power to increase tax compliance within the country.

Once upon a time there was an attempt to increase the rate of the VAT in Nigeria but this was vehemently kicked against. It is however my thought that in the light of the figures gotten from the National Bureau of Statistics (NBS) an improvement and encouragement of the manufacturing sector in Nigeria will greatly impact and increase government revenue. According to the data of the NBS, from the period spanning from January to November, 2017, the manufacturing industry in Nigeria contributed about N121.03 Billion which represents about 17.25% of the VAT revenue in Nigeria. With all the challenges that face this sector in the nation, the industry still stands out as the highest contributor to VAT in Nigeria.

It would be a wise decision to pay ample attention not only the goose laying the eggs now but to the goose that has potential to lay multiple eggs within a short period of time. In order words, encouraging the manufacturing industry in Nigeria should be a core concern for the government. Therefore, My Case for Better Returns from VAT is that the Manufacturing Industry be Properly Recognized and the Challenges facing them should be Eradicated… I rest my case