According to the National Bureau of Statistics (NBS), the product tax in the Nigerian economy witnessed a substantial increase of 112.02 percent, soaring from N1.43 trillion in 2019 to N3.03 trillion in 2022. This surge aligned with the implementation of a Value Added Tax (VAT) hike, raising it from 5 percent in 2020 to 7.5 percent in 2022.
The NBS report, titled “Nigerian Gross Domestic Product Report (Expenditure and Income Approach),” sheds light on the analysed years. Net taxes on products, encompassing the total taxes payable on products excluding subsidies received, reached N1.43 trillion in 2019 prior to the introduction of the new VAT regime.
With the new VAT regime taking effect in 2020, product taxes surged by 34.97 percent, amounting to N1.93 trillion. This upward trajectory continued in 2021, witnessing a further increase of 32.13 percent to N2.55 trillion. Finally, in 2022, net taxes on products experienced a growth of 18.88 percent, reaching N3.03 trillion.
The NBS provided insights into the expansion of product tax, highlighting a year-on-year real growth of 10.30 percent in Q3 and 11.18 percent in Q4 of 2022. These figures were lower compared to the 6.22 percent and 67.99 percent observed in Q3 and Q4 of 2021, respectively.
On an annual basis, the growth rate in 2022 amounted to 14.19 percent, which was lower than the 25.81 percent growth observed in 2021. In nominal terms, the growth rate of net taxes on products stood at 24.95 percent in Q3 of 2022 and 23.71 percent in Q4 of 2022.