The Federal Inland Revenue Service (FIRS), generated a sum of N1.29 trillion tax revenue in Q2 2020, N19.15 billion in excess of a N1.27 trillion target.
This was detailed in the Q2 performance report published by the Federal Inland Revenue Service (FIRS).
According to the report, 34.2% of the tax revenue was petroleum profit taxes (N440.3 billion), while the remaining 65.8% came in as non-oil taxes (848.1 billion).
The total tax collection in the second quarter of 2020 increased by 8.2% compared to N1.19 trillion generated in the previous quarter, and 8.01% decrease compared to N1.4 trillion generated in the corresponding quarter of 2019.
Data obtained from Nairalytics shows that the last time the agency met its set target was in the second quarter (Q2) of 2015 when it generated the sum of N1.19 trillion as against a target of N1.02 trillion.
More Details: A closer look at the report shows that Company Income Tax stood at N324.3 billion in the second quarter while Gas Income tax was N77.7 billion. Also, import VAT collected by the Nigeria Custom Service (NCS) was N81.62 billion, while Non-import VAT stood at N245.6 billion.
Stamp duty generated during the period was N62.6 billion as against a target of N4.3 billion, while Capital gains tax was N617.4 million.
Earlier in the year, the Federal Government of Nigeria increased the Value Added Tax (VAT) rate from 5% to 7.5% in order to help boost the county’s fiscal revenues amidst global oil crisis.
This move led to VAT revenue of N651.8 billion in the first half of 2020, which indicates an 8.5% increase compared to N600.9 billion generated in the corresponding period of 2019.
However, despite the increase in VAT remittances, major sectors of the economy recorded significant declines in VAT remittances during the period, attributable to the COVID-19 induced lockdown across the country especially in the second quarter of the year.
Upshots: Following the decline in the prices of oil in the global market, which has served as a major source of revenue for Nigeria, the country needs to rely heavily on taxes in order to fund its federal and state government expenditures.
To achieve this objective, it is necessary to broaden its tax base and devise more creative ways of collecting taxes and hope that economic activities pick up to be able to meet set projections.