FG, States Get Higher Allocation as FAAC Disburses N786.161 Billion May Revenue

*FIRS targets 40m traders in fresh initiative to improve VAT remittance by informal sector

Ndubuisi Francis and James Emejo in Abuja

The Federation Account Allocation Committee (FAAC) yesterday disbursed the sum of N 786.161 billion as May 2023 federation account revenue to relevant stakeholders.
Also, worried by the low level of Value Added Tax (VAT) remittance in the informal sector of the economy, the Federal Inland Revenue Service (FIRS) has partnered with the Market Traders Association of Nigeria (MATAN) to collect and remit consumption tax to the former.

The FAAC allocation indicated an increase of N130.230 billion over the N655.93 billion shared in the preceding month.
The N786.161 billion total distributable revenue comprised distributable statutory revenue of N519.545 billion, distributable Value Added Tax (VAT) revenue of N251.607 billion, Electronic Money Transfer Levy (EMTL) of N14.370 billion, and Exchange Difference revenue of N0.639 billion.  

Separate statements from the Ministry of Finance, Budget and National Planning and the Office of the Accountant General of the Federation cited a communiqué issued at the end of the FAAC) meeting for June 2023, which was chaired by the Accountant General of the Federation, Mrs. Oluwatoyin Madein.
Total deductions for cost of collection in the reference month was N38.238 billion while total deductions for transfers and refunds was N163.193 billion.
From the total distributable revenue of N786.161 billion, the federal government received N301.889 billion, the states received N265.875 billion, while the local government councils got N195.541 billion.

A total sum of N22.855 billion was shared to the relevant states as 13 per cent derivation revenue.
Gross statutory revenue of N701.787 billion was received for the month of May, an amount which surpassed the sum of N497.463 billion received in the previous month by N204.324 billion.  

Also for the month of May 2023, the gross revenue available from the Value Added Tax (VAT) was N270.197 billion.  
This was higher than the N217.743 billion available in the month of April by N52.454 billion.  
However, the distributable VAT revenue for the month of May was N251.607 billion from which the federal government received N37.741 billion, states got N125.804 billion and the local government councils received N88.062 billion.
The N14.370 billion Electronic Money Transfer Levy (EMTL) was also shared with the federal government receiving N2.155 billion, the states received N7.185 billion and the local government councils got N5.030 billion.

From the N0.639 billion Exchange Difference revenue, the federal government received N0.307 billion, state governments received N0.156 billion, the local government councils got N0.119 billion while the sum of N0.057 billion was shared to the relevant states as 13 per cent mineral revenue.
According to the communiqué, in the month of May 2023, Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Oil and Gas Royalties, Value Added Tax (VAT), Import and Excise Duties increased significantly, while Electronic Money Transfer Levy (EMTL) decreased marginally.
The balance in the Excess Crude Account (ECA) stood at $473,754.57 as of June 22, 2023.

FIRS Targets 40m Traders in Fresh Initiative to Improve VAT Remittance by Informal Sector

Meanwhile, the FIRS has partnered with MATAN to collect and remit consumption tax to the former.
MATAN membership is estimated at over 40 million traders across the 774 local governments in the 36 states of the federation including the Federal Capital Territory (FCT), and remains the biggest player in Nigeria’s market space.

The agreement was reached at a stakeholders’ engagement programme on the VAT DIRECT Initiative (VDI) in Lagos.
The initiative was designed to foster collaboration between the FIRS and the market place, especially the informal sector, in the collection and remittance of VAT using technology.  

Speaking at the programme, the Executive Chairman, FIRS, Mr. Muhammad Nami, said the administration of VAT in the informal sector was characterised mainly by low level of compliance and lack of awareness in terms of obligation and liability.
He pointed out that the partnership with the informal sector would see the tax apex authority collaborating with the association to deploy technology to enumerate traders for collecting and remitting VAT to the service.

He said the development was expected broaden the tax net and increase revenue for the federation.
Nami added that the initiative which is currently unprecedented, remained crucial to revenue generation as well as eliminating multiple taxation, especially from the informal sector.

He said the government was worried about the multiplicity of taxes, adding that the service was working with the Joint Tax Board (JTB) on various modalities of addressing the challenge.
He said the partnership further laid a good foundation for the government to address the issue of multiple taxation and extortion by tax officials, agents and touts in the market place.  

He stressed that the service would collaborate with security agencies, especially the police to deal with illegal tax collection by touts in markets.  
Nami said, “One important area of our collaboration is the issue of providing adequate security in the markets. We are aware of the challenges that you have faced in the past with miscreants, self-imposed tax collection agents, and touts.  

“I want to assure you that as part of this initiative, we will be collaborating with the relevant security agencies particularly the Nigeria Police Force to tackle all forms of touting and illegal tax collection by miscreants and keep them away from your markets.”  
He said the success of the collaboration would lead to increased revenue for the country, and in turn provide government the needed resources to fund infrastructure and other social amenities.  

In a statement issued by his Special Assistant on Media and Communication, Mr. Johannes Wojuola, Nami said, “The successful outcome of this collaboration and additional revenue accruable will have multiplier effects on all sectors of the economy as the government will have more revenue to provide the needed social amenities and infrastructure in critical sectors.  
“An improved VAT collection will improve the revenue base of the States and Local Governments at the sub-national level and the citizens will be the ultimate beneficiaries.

“This initiative is very important to the government, particularly at this moment of dwindling revenues from the petroleum sector and therefore, requires that we put all hands-on deck and optimally explore all available opportunities.  
“The administration of VAT in the informal sector is characterised mainly by a low level of compliance and a lack of awareness in terms of obligation and liability. It, therefore, becomes necessary to leverage the MATAN platform to positively change the status quo.”
He added that to ensure transparency and accountability of the project operations, a combined monitoring and evaluation team comprising both parties would be formed.