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Business News of Monday, 22 November 2021

Source: www.sunnewsonline.com

How PPT, VAT cream off N68bn from federation account

The Federation Accounts Allocation Committee (FAAC) The Federation Accounts Allocation Committee (FAAC)

The Federation Accounts Allocation Committee (FAAC) last week shared N671.910 billion for the month of October among the three tiers of government.

This figure was down by N68 billion from the allocation shared for the previous month, according to the Deputy Director, in charge of Information, Ministry of Finance,  Mr Oshundun Olajide.

In a communique issued at the end of their meeting in Lagos on Wednesday, November 17, the Account Allocation Committer stated that the “gross revenue available from the VAT for October was N166.284 billion, as against N170.850 billion for September, resulting in a decrease of N4.566 billion. The gross statutory revenue of N407.864 billion received for the month of October was lower than the N692.283 billion received in the previous month by N284.419 billion. Petroleum Profit Tax (PPT), oil and gas royalties and Companies Income Tax (CIT) decreased considerably. Also, there was a slight decline in Value Added Tax (VAT), whereas import Duty and Excise increased marginally.

“The distributable statutory revenue for the month is N363.849 billion; VAT is N154.844 billion and Exchange Gain is N3.217 billion. There were augmentations of N100 billion and N50 billion  from the non-oil mineral revenue, bringing the total distributable revenue to N671.910 billion.”

Giving insight into how PPT and Oil & Gas Royalties were negatively impacted in October, Mr Muhammad Nami, executive chairman of Federal Inland Revenue Service (FIRS), on Wednesday, October 13, blamed the drop on oil production output shortfall.

He stated: “It (fall in taxes) has to do with the drop in OPEC quota to Nigeria. It is as low as 1. 4 million barrels per day, as against 2.4 barrels per day (bpd) that we used to have, and Nigeria is not even able to produce up to that 1.4 million bpd. What we currently produce is in the region of 1.2 million barrels and 1.25 million barrels on a monthly basis.

“So, you can imagine the difference of the impact that 1 million barrels a day will have on the revenue of this country and also on the taxes that come from that revenue”.

Nigeria’s oil output increased marginally in September to an average of 1.25 million barrels per day from the lowest hit in August — 1.24 million. The country has also been performing below the Organisation of Petroleum Exporting Countries (OPEC) quota, from an average of 1.36 million barrels per day in January 2021 to the current 1.25 million.

As for the VAT which dropped to N154.844billion from N159.096 billion, this might not be unconnected with the ongoing VAT war between the Federal Government and some states.

Recently, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, hinted that the Federal Government would consider an out-of-court solution in resolving the crisis surrounding the VAT collection between the FIRS and some state governments.