Corporate Tax, VAT drive federation account to N6.86tn – CBN

• Published On: 05 January 2025 at 17:00

The Central Bank of Nigeria's latest Economic Report shows that receipts into the federation account increased by 7.48% to N6.86 trillion in the third quarter of 2024.

According to the report, the increase in gross federation account earnings was driven by higher corporate and value-added tax receipts.

The Federal Inland Revenue Service defines corporate tax as a levy on the profits of Nigerian businesses governed by the Companies Income Tax Act.

In contrast, VAT is a tax levied on the consumption of goods and services.

Non-oil revenue totalled N5.56 trillion, with oil revenue accounting for the remainder, according to the report.

According to the CBN report, gross federation account earnings increased due to higher non-oil revenue receipts. At N6.86 trillion, the provisional gross federation account receipt was 7.48 percent higher than the previous quarter but 23.71 percent lower than the benchmark.

"The increase was largely driven by higher corporate and value-added tax receipts. The composition of gross federation revenue revealed that non-oil revenue remained dominant, accounting for 81.00 percent, with oil revenue making up the balance.

"Non-oil revenue, at N5.56 trillion, was 19.48 and 50.36 percent higher than in the previous quarter and target, respectively. The increase over the previous quarter was primarily due to higher corporate and value-added tax collections. The increase over quarterly targets reflects better revenue collection than budget expectations."

The apex bank revealed that oil revenue fell by 24.72% to N1.30 trillion in the third quarter of 2024 compared to the second quarter of 2024, owing to lower receipts from petroleum profits, taxes, and royalties.

The revenue was also 75.39% lower than the quarterly target, owing to shut-ins caused by ageing oil pipelines and installations.

The three tiers of government received approximately N3.92 trillion of the N6.87 trillion in federally collected revenue.

The federal, state, and local governments received N1.27 trillion, N1.36 trillion, and N0.99 trillion, respectively, with the remaining N0.30 trillion going to the 13% Derivation Fund for oil-producing states.