Banks pay N80.2bn taxes to FG in H1

Purchasing Power To Decline As FG Slams New Tax

The federal government, in continuation of its aggressive revenue drive, was able to reap N80.2 billion in taxes from banks in the first half of the current year.

The taxes paid by banks was a 10.7 per cent improvement over N72.49 billion paid into the government coffers in the same period in 2020.

A total of N10.99 billion had been paid as Value Added Tax(VAT) in the first six months of the year while N69.26 billion was paid as Company Income Tax between January and June this year.

Data released by the National Bureau of Statistics(NBS) showed that N3.28 billion had been paid as VAT in the first three months of the year.

This increased by more than 134 per cent in the second quarter to N7.71 billion. Year on year, the second quarter VAT remittance had increased by 50.87 per cent when compared to N5.11 billion that was recorded in the second quarter of 2020.

In total, VAT collected rose by 3.2 per cent quarter on quarter and 56.5 per cent year on year to N512.25 billion while CIT increased by 20.2 per cent quarter on quarter and 17.4 per cent year on year to N472.07 billion.

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This brings the total income from VAT and CIT to N984.32 billion, an increase of 10.72 quarter on quarter. A further breakdown of the VAT income showed improved collections from the mining, banks and financial institutions as well as properties and investments sectors.

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While VAT income from mining sector soared by 16,677 per cent quarter on quarter and 12,239 per cent year on year to N8.11 billion, VAT from the Properties & Investments sector rose by 312 per cent to N4.75 billion.

Major contributors to VAT include; other manufacturing sector which contributed N44.89 billion t o VAT in the second quarter of the year while, professional services sector  contributed N29.30 billion, commercial & trading sector contributed N21.95 billion, State ministries & parastatals sector contributed N18.41 billion and transport & haulage services sector contributed N13.99 billion to the VAT pool.

However, textile & garment industry contributed N77.74 million VAT, pharmaceutical, soaps and toiletries have a contribution of N188.71 million as well as chemicals, paints and allied industries with a N281.04 million contribution were the least contributors to the VAT income in the quarter under review.

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For CIT income, the sectors which contributed mostly to the VAT income also generated more tax income for government as transactions from those companies operating in the sectors increased, thus, having a positive impact on their revenue and profitability.

Specifically, CIT from professional services sector was the largest, rising quarter by 616 per cent to N130.09 billion in Q2 2021. This was followed by other manufacturing sector which rose q-o-q by 437 per cent to N103.52 billion, and Banks & Financial Institutions sector.


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