What you need to know about the fall in Nigeria’s tax revenue

According to The Punch, Nigeria earned a total of N2.92tn from taxes in the first nine months of 2015. This amount represents a N520bn decrease from the target set by the Federal Government for the Federal Inland Revenue Service (FIRS).

In the first quarter of 2015, the Federal Inland Revenue Service (FIRS) collected the sum of N756.7bn against the quarterly revenue target of N1.02tn. Petroleum Profit Tax (PPT), contributed N368.59bn and non-oil taxes contributed N388.1bn of the total sum of money collected in tax for the first quarter of 2015. The FIRS collected a total sum of N1.18tn for the second quarter where PPT contributed N306.14bn and non-oil taxes contributed the balance of N881.9bn. In the third quarter, the FIRS generated the sum of N980.48bn from taxes against the quarterly target of N1.14tn, this time the PPT generated the sum of N325.86bn and non-oil taxes accounted for N654.6bn.

In the past, Nigeria was heavily dependent on oil as it’s major source of income but it is currently grappling with the effect of a fall in global oil prices. This fall in revenue generated from the oil sector has affected Petroleum Profit Tax which used to be the highest contributor of revenue for the FIRS. However, the current administration is working towards diversifying the economy in order to get other sources of income.

A closer look at the ease of paying taxes in Nigeria and the effect of a lower tax revenue:

  • Femi Adekoya of the Guardian newspaper wrote that lower tax revenue might affect Nigeria’s 2016 budget.
  • According to a report on a joint survey by PWC and the World Bank on the ease of paying taxes 2016, Nigeria ranks 181 out of the 189 economies covered.

The post What you need to know about the fall in Nigeria’s tax revenue appeared first on Ventures Africa.