Lagos – The manufacturing sector contributed about N864 billion of the N3.63 trillion generated as Value Added Tax (VAT) from 2013 to 2018, an analysis by the National Bureau of Statistics (NBS) has revealed. The NBS report on Sectoral Distribution of VAT showed that the manufacturing sector’s contribution represented 24 per cent of the total VAT generated within the six-year period. A breakdown of the N3.63 trillion indicated that N481.5 billion was generated in 2013, N493.9 billion in 2014, while N759.4 billion and N777.51 billion, were generated in 2015 and 2016, respectively. According to the report, N972.35 billion and N1.10 trillion were generated as VAT in 2017 and 2018, respectively, with the amount generated as 2018 VAT being the highest in the six-year period.
The manufacturing sector has eight sectoral activities among the 28 sectoral categories in the report.
Tha manufacturing sector’s sectoral activities included
automobiles and assemblies, breweries, bottling and beverages; as well
as chemicals, paints and allied industries.
Others are other manufacturing, petrochemical and
petroleum refineries; pharmaceutical, soaps and toiletries; publishing,
printing and paper packaging; and textile and garment industries.
For VAT in the six-year period, the automobiles and
assemblies contributed N8,691,597,713.42, breweries, bottling and
beverages added N192,028,180,262, and chemicals, paints and allied
industries contributed N6,989,648,842.73.
Other manufacturing has N597,005,133,563, petrochemical
and petroleum refineries added N37,013,858,414.6, and pharmaceutical,
soaps and toiletries provided N7,131,243,714.78 to VAT.
Publishing, printing, paper packaging contributed
N9,685,665,303.04, while textile and garment industry added
N5,501,007,456.24 to the VAT in the six-year period.
Mr Hamma Kwajaffa, Director-General, Nigeria Textile
Manufacturers Association, commended the manufacturing sector’s
contribution to VAT, saying there was a correlation between economic
growth and VAT revenue.
He said that increased contribution of manufacturing
sector to VAT, especially in the fourth quarter of 2018, was driven by
consumer spending during Christmas season.
Kwajaffa urged the Federal Government to improve
infrastructure support, fiscal incentives, financing, anti-smuggling
activities and implementation of the executive order on patronage of
locally produced goods.
He said that doing these would boost the sector’s performance and invariably its contribution to VAT and Gross Domestic Product.
Similarly, Mr Muda Yusuf, Director-General of the Lagos
Chamber of Commerce and Industry (LCCI), urged the government to create a
better environment that would reduce cost of production and make
manufacturers more competitive.
Yusuf said that government should expedite action to
address infrastructure problem, especially power which, he said, was a
huge challenge to the sector.
“Review some of the high tariffs on their inputs to
increase their profitability and revenue contribution to government as
well as company income tax to boost reinvestment and compliance to tax
“If the environment is conducive for them through
concessions, they will create more jobs. Aside the revenue benefits,
there is also the social benefits for the society.
“Government can look at the regulatory environment which
most manufacturers complain is too harsh; many of the regulators are
like revenue-generating agencies on their own,” he said.
He urged the government to review the cost of fund for manufacturers and evolve better mechanism for long-term financing.
Also, Mr Taiwo Oyedele, Tax Leader,
PricewaterhouseCoopers, West Africa, said that the Federal Government
would require more reliable data on who the VAT payers were.
“According to reports, only three per cent of the
taxpayers in the VAT net contributes 97 per cent of the revenue, which
means a lot of companies that ought to be paying VAT are not in the tax
net, while some are there, but are not remitting,” he said.
Oyedele said that VAT improvement in 2018, compared to
other years, was reflective of the increased efforts of the Federal
Inland Revenue Service to increase tax compliance among taxpayers.
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