E-Financial
FG Plans Aggressive VAT, Other Tax Regime
Amidst on-going controversy over its rights to collection of Value Added Tax, VAT, across the country, the Federal Government is set to implement an aggressive VAT revenue drive which it expects to yield about N316 billion next year.
This forms part of the 2022 fiscal policy plan which is also reflected in the Appropriation Act presented previous week to the National Assembly by the executive arm of the government.
Under the aggressive tax revenue drive, the FG is also expecting to rake in N29.3 billion as charges from electronic money transfers, a new revenue line it hopes to implement in 2022.
The targeted VAT revenue for 2022 is 99.2 percent higher than N158.95 billion budgeted in 2021 and represents 3.12 percent contribution to the total targeted N10.13 trillion government’s revenue for the year.
Recall that the FG had in 2020 introduced various consumption taxes and increased the VAT rate to 7.5 percent from five percent in a bid to raise its revenue in the face of falling oil prices.
The revenue drive comes at a time the federal government is enmeshed in legal tussle with some states over collection and control of VAT revenue.
Presently, the FG is locked in a legal battle with the Rivers and Lagos state governments as some other states threaten to join the battle to take over VAT collection in their respective states from the FG.
However, five northern states, including Adamawa, Plateau, Kaduna, Kogi and Zamfara are set to take side with the FG in the battle against Rivers and Lagos state governments over VAT.
Besides raising the expected VAT revenue for 2022, the government also raised its target from other tax heads under the non-oil revenue tax, which include the Company Income Tax (CIT), customs revenue and the federation account levies, leading to 59.3 percent increase in the 2022 non-oil revenue (N2.132trn) budget when compared to N992.63 trillion budgeted this year.
Specifically, the government expects to raise N909.30 billion from CIT, which is a 100.07 percent increase over N454.48 billion budgeted in 2021.
Customs revenue was increased by 146.2 percent to N834.12 billion from N338.85 billion, while the federation account levies was increased by 78.41 percent to N71.97 billion from N40.34 billion budgeted in 2021.
Vanguard’s analysis of the 2021 budget shows that the government has so far surpassed its non-oil revenue as at the end of August 31, 2021 following the aggressive revenue drive.
While the FGN share of oil revenues was N754.2 billion, representing 56.3 percent performance of the prorated sum of N1.34 trillion in the 2021 budget, non-oil tax revenues totalled N1.15 trillion, 15.7 percent higher than the targeted sum.
CIT and VAT collections at N547.54 billion and N235.77 billion, were 20.5 percent and 48.3 percent increase respectively over their respective targets for the period.
However, custom revenue and federation account levies are so far 0.1 percent and 34.6 percent lower than N338.85 billion and N40.34 billion in the 2021 budget respectively as at the end of August.
Titan Trust Bank has selected Oracle FSS for its core and digital banking technology, it is understood.
The start-up bank recently obtained its license by the Central Bank of Nigeria (CBN).
It’s understood that Temenos and Infosys also competed for the deal.
The shortlist came down to the two most widely installed international core systems in Nigeria, Infosys’ Finacle and Oracle FSS’s Flexcube.
The Nigerian banking sector has seen a great deal of upheaval over the years, with many mergers, start-ups and closures. Flexcube is a well respected name since the late 1990s (the pioneer was Access Bank, now one of the country’s top five banks) and has been a commonly selected platform since then.
The new bank is believed to be one of five to have gained regulatory approval of late (Globus Bank is another).
Local media sources say the new licences stem from the Central Bank’s desire to attract new investments into the sector and better serve the country’s 50 million+ unbanked and under-banked citizens.
Titan Bank is said to be headed by a former executive director of Heritage Bank (which is a Finacle user).
Oracle FSS did not respond to request for comment.
International Monetary Fund (IMF), has appointed Tony Elumelu, Nigerian billionaire and group chairman of Heirs Holdings, owners of United Bank of Africa, to its advisory council on entrepreneurship and growth, convened by Kristalina Georgieva, the fund managing director.
The announcement was disclosed in a statement on Friday.
According to the statement, the IMF advisory council comprises global business leaders, policymakers, and academics dedicated to identifying and addressing regulatory barriers to entrepreneurship.
The IMF said Elumelu will be instrumental in ensuring that Africa’s entrepreneurship is central in policy making.
“Elumelu, Africa’s leading advocate of entrepreneurship and whose Foundation has funded, mentored, and trained over 25,000 African entrepreneurs since 2015, champions entrepreneurship as the engine for the economic transformation of Africa,” the statement reads.
“A self-made entrepreneur, Elumelu’s embracing of entrepreneurship is fundamental to his concept of Africapitalism, his belief that Africa’s private sector can and must play a leading role in the continent’s development, making long-term investments that deliver social and economic value.
“Elumelu will be instrumental in ensuring that Africa’s entrepreneurial potential is central to global economic policy making.”
Speaking at the inaugural meeting of the advisory council on March 26, Georgieva said the appointees would share their experiences on how macroeconomic and financial policies “can provide a supportive environment for innovation, entrepreneurship, and productivity — key ingredients for a thriving private sector and strong economic growth”.
Africa’s Micro, Small, and Medium Enterprises, fintech industry, scaling remittances, and cross-border payments will be the driving forces behind the continent’s digital ballooning payments system, which is estimated to reach $1.5 trillion by 2030.
This is according to a MasterCard-commissioned study by Genesis Analytics, which states that the digital payments economy is growing faster on the continent.
This comes as the World Bank says Sub-Saharan Africa has shown significant growth in financial inclusion over the past decade, much of it driven by mobile money account adoption.
Dimitrios Dosis, president, Eastern Europe, Middle East and Africa at MasterCard, comments: “Africa is filled with immense possibilities, and its people have the potential to shape the global economy in the decades ahead.
“MasterCard remains deeply committed to driving digital transformation across the continent, working closely with entrepreneurs, merchants, banks, start-ups, telcos, and governments. By increasing our investments, expanding innovation, and fostering inclusion, we are helping build a more connected and accessible digital future.”
The payment technology company went on to say as a longstanding technology partner to Africa, its continues to strengthen its commitment to the continent’s digital growth through strategic investments, public-private partnerships, and innovation initiatives that drive financial health and economic growth.
In addition, it says trends in Africa signal a strong shift towards digital transactions, with businesses and consumers increasingly embracing contactless solutions, further accelerating economic participation and financial accessibility across the region.
“For over five decades, MasterCard has worked alongside African governments, businesses, and communities to advance financial inclusion and economic development.
“With Africa projected to host nine of the world’s 20 fastest-growing economies, we are focused on leveraging our expertise and a technology to support the continent’s continued digital transformation.
“Our investments today will help build a more resilient economy for the future,” says Mark Elliott, division president, Africa, MasterCard
By fostering collaboration with key stakeholders, MasterCard says it aims to enhance digital connectivity, expand economic opportunities, and enable millions of people and businesses to thrive in the digital economy.
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