FG may increase VAT rate by additional 2.5% in 2021

On Tuesday, the federal government revealed that it had spent N7.09 trillion at the end of the third quarter of fiscal 2020, just as it revealed plans to introduce an additional 2.5% value-added tax (VAT) rate in fiscal 2021 as part of efforts aimed at increasing income generation.

The Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, revealed this when presenting the overview of fiscal 2020 results and the implementation of the budget / defense of the 2021 budget to the House Finance Committee, chaired by the Hon. James Faleke ..

According to documents presented to the Committee, at the end of the third quarter of 2020, the federal government revenues available for budget financing (excluding GOEs) were N2.83 trillion, 70% of the target. The federal government’s share of oil revenue was N1.203 trillion (representing a return of 158%, above the prorated sum in the revised 2020 budget), while non-oil tax revenue totaled N927.47 billion (76% of revised target).

The collection of corporate income tax (CIT) and value added tax (VAT) was 486.68 billion and 137.03 billion naira, which represents 79% and 64%, respectively, of the goals. revised prorated for the period. Customs collection was N303.76 billion (78% of the revised target). Other income amounted to 697.75 billion naira, of which independent income was 390.50 billion naira.

On the expenditure side, 9.97 trillion naira was allocated (excluding GOE and project-linked loans), while 7.09 trillion naira was spent (representing 94.7% of the apportionment of 7, 48 trillion naira). Of the expenditures, Naira 2.54 trillion was used for debt service and Naira 2.43 trillion for personnel expenses, including pensions. By the end of September 2020, naira 873.9 billion had been released for capital expenditures.

Responding to various questions posed by legislators, Dr. Ahmed explained that: “Release of votes across the service for two elements, the first is a pension fund, the second is a support fund for universities; we have received disbursements. In pension, we have a provision in the 2021 budget of N150 billion, but we will still sit down with PENCOM on how to disburse.

“Sir. The president has approved the implementation of the Oronsoye report and has directed the SGF and the Head of Service to carry out that process. Many agencies have been launched and the size of government spending has increased. The essence is to reduce expenses by merging some agencies and reducing the number of agencies we have.

“The 2021 budget of the Ministry of Finance is about automation to improve the efficiency of revenue collection in agencies. We will be very soon. Currently, we have an automation process that allows us to capture revenue. We have a monthly reconciliation exercise across all major agencies to confirm that reported revenues are complete. We established the National Social Investment Program, so far N279.10 billion have been released ”, said the Minister.

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