₦airaland Forum

VAT is NOT a productivity measurement, rather a CONSUMPTION measurement. The higher you CONSUME, the bigger your VAT.
For all those jubilating about how much VAT your state generate or collect, please go back to class 3 and start studying Economics.

If State A produces and State B consumes, State B will have higher VAT collection than State A, which is more productive State.

Start making excuse for your dead economy.

Is that not an indication that the economy is active and huge cash flow support businesses and trickle down to the people.

One is not surprised when some state attract zero FDI, leading to their people seeking greener pasture in other viable states

Validated:
VAT is NOT a productivity measurement, rather a CONSUMPTION measurement. The higher you CONSUME, the bigger your VAT.
For all those jubilating about how much VAT your state generate or collect, please go back to class 3 and start studying Economics.

If State A produces and State B consumes, State B will have higher VAT collection than State A, which is more productive State.

Give an example of productivity measurement

Ttalk:
Start making excuse for your dead economy

That is all you can say, argue the point and give your perspective, you do not have. You are a CONSUMER to be having high VAT collection. Go and ask Oyedele. Producers receive back or Net-off INPUT VAT, while CONSUMERS PAY or VAT are collected from CONSUMERS.
Learn SIMPLE economics and stop advertising your ignorance 🤷‍♂️

Globad:
Give an example of productivity measurement

Read my post above ... PRODUCERS pass the INPUT VAT over to CONSUMERS. As a producer, when you but materials, you pay VAT, when you SELL your products to CONSUMERS, you NET OFF your input VAT. It is the CONSUMER that PAYS FINAL TAX (aka VAT). I know your comprehension cannot carry that. Go and ask OYEDELE.

Ttalk:
Start making excuse for your dead economy.

Is that not an indication that the economy is active and huge cash flow support businesses and trickle down to the people.

One is not surprised when some state attract zero FDI, leading to their people seeking greener pasture in other viable states

You derailed completely. FDI has NOTHING in common with VAT. Go and Verify! Infact, when you but anything abroad and pay HST, you can collect it back at the port of exit.

Validated:
VAT is NOT a productivity measurement, rather a CONSUMPTION measurement. The higher you CONSUME, the bigger your VAT.
For all those jubilating about how much VAT your state generate or collect, please go back to class 3 and start studying Economics.

If State A produces and State B consumes, State B will have higher VAT collection than State A, which is more productive State.

This must be obi people🤣

Validated:
Read my post above ... PRODUCERS pass the INPUT VAT over to CONSUMERS. As a producer, when you but materials, you pay VAT, when you SELL your products to CONSUMERS, you NET OFF your input VAT. It is the CONSUMER that PAYS FINAL TAX (aka VAT). I know your comprehension cannot carry that. Go and ask OYEDELE.

You are confusing yourself.

First you said, VAT is a measure of consumption and not productivity, but here you are saying producers pass the tax on consumers.

Since VAT collection in Nigeria isn't directly from point of sale but rather production point wing to the nightmare logistics of tracking every sale point, VAT generation is tied more to production. Hence why States like Lagos, Ogun, and Oyo that have functioning production base generate the highest in VAT.

Even if we go by your initial argument in your first post, high consumption rate is a sign of booming economy as there is both the population and disposable income. Where a state has a higher consumption rate, that translates to higher disposable income and purchasing power - signs of a booming productive economy.

If we are to even apply VAT to farmers in the north, you will see that northern Nigeria is highly productive under a sustainable agro-based economy.

Validated:
VAT is NOT a productivity measurement, rather a CONSUMPTION measurement. The higher you CONSUME, the bigger your VAT.
For all those jubilating about how much VAT your state generate or collect, please go back to class 3 and start studying Economics.

If State A produces and State B consumes, State B will have higher VAT collection than State A, which is more productive State.

Let keep Theory apart,
After state B collection of higher Tax, how did state B make the money to stay to sustain the economy?

State A produce and generates law materials use in production to enable make more profit
after logistics expenses, the fact that state A produce law materials and finish product is enough to sustain her economy. The profit generated by state A remain untouchable, because they continue producing of law materials and finish product.

but Higher Tax generated by state B still go back into unstoppable recirculating expenses, leading state B to always in searching of how to collect more Higher Tax.

A production state can be satisfied but non production state that believe to keep functioning by Taxing consumption can't be satisfies. Reality and theory is not the same.

DomPerignon:
You are confusing yourself.

First you said, VAT is a measure of consumption and not productivity, but here you are saying producers pass the tax on consumers.

Since VAT collection in Nigeria isn't directly from point of sale but rather production point wing to the nightmare logistics of tracking every sale point, VAT generation is tied more to production. Hence why States like Lagos, Ogun, and Oyo that have functioning production base generate the highest in VAT.

Even if we go by your initial argument in your first post, high consumption rate is a sign of booming economy as there is both the population and disposable income. Where a state has a higher consumption rate, that translates to higher disposable income and purchasing power - signs of a booming productive economy.

If we are to even apply VAT to farmers in the north, you will see that northern Nigeria is highly productive under a sustainable agro-based economy.

Let me ask you one SIMPLE QUESTION.
What is the VAT rate for a bag of Garri (Nigeria 's most consumed food)?
What is VAT on one Cow from Katsina?
What is VAT rate on A tuber of yam from Benue?
Your VAT collections simply means you are a NET CONSUMER.
You consume manufactured goods that are VATABLE.
You consume IMPORTED goods that are VATABLE.
You CONSUME oil and gas from Niger Delta and pay VAT.
Tell me what you produce in South West, NOTHING!

OP is NOT a very smart person!

It's LITERALLY in the name—VALUE ADDED TAX.

How clearer can it be?!

Furthermore, this is how VAT is addressed in Section 145 of the NTA 2025:

VAT shall be paid on all taxable supplies in Nigeria.

For those like OP who have a hard time understanding simple English, supplies means a Supplier or business entity is engaged in productive economic activity is selling.

The Law was specifically worded to target SUPPLIER.

It is SUPPLIERS who collect VATs on behalf of the tax authorities. In fact, suppliers who FAIL to collect VAT would be in serious LEGAL trouble.

OP's arguments that the VAT reflects just consumption is absolute MADNESS.

If there is an EXTREMELY productive state in Nigeria, their VATs would reflect it.
Because the people who are doing the production would be the people who are collecting the VATs.
And the VATs would reflect in the collections of that state.

VAT is a very NICE picture of the productivity of states in Nigeria.

If OP doesn't like the picture, that SUCKS for him.
But that is NOT an excuse to spread FAKE information.

Namaster:
OP is NOT a very smart person!
It's LITERALLY in the name—VALUE ADDED TAX.
How clearer can it be?!

You are the one NOT SMART ...Who adds the VALUE, producer or consumer? You pay for the VALUE the PRODUCER ADDED, not the consumer addition. Consumers pay VAT.

Validated:
You derailed completely. FDI has NOTHING in common with VAT. Go and Verify! Infact, when you but anything abroad and pay HST, you can collect it back at the port of exit.

No economic indices work in isolation, it is linked to one another.

An investor will look out for certain economic indices to make decision. High purchasing power, cash flow, spending pattern and many elements are put into consideration.

Where an accurate data is not accessible, those indices are used in making investment decisions.
If your state generates low VAT, it is clear indication that the purchasing power is poor, which in turn translate to sluggish or retard cash flow. The consequence will be poor local and foreign investment and to sum it up lead to a poor economy.

You only rely on lopsided Nigeria feeding bottle formula where you are being gifted what you don't work for, let every state start relying on its IGR then you will know that VAT is one the vital income generation component that no serious state should joke with

Validated:
Let me ask you one SIMPLE QUESTION.
What is the VAT rate for a bag of Garri (Nigeria 's most consumed food)?
What is VAT on one Cow from Katsina?
What is VAT rate on A tuber of yam from Benue?
Your VAT collections simply means you are a NET CONSUMER.
You consume manufactured goods that are VATABLE.
You consume IMPORTED goods that are VATABLE.
You CONSUME oil and gas from Niger Delta and pay VAT.
Tell me what you produce in South West, NOTHING!

You can start by telling us what you produce in the SE.

Ttalk:
No economic indices work in isolation, it is linked to one another.

An investor will look out for certain economic indices to make decision. High purchasing power, cash flow, spending pattern and many elements are put into consideration.

Where an accurate data is not accessible, those indices are used in making investment decisions.
If your state generates low VAT, it is clear indication that the purchasing power is poor, which in turn translate to sluggish or retard cash flow. The consequence will be poor local and foreign investment and to sum it up lead to a poor economy.

You only rely on lopsided Nigeria feeding bottle formula where you are being gifted what don't work for, let every state start relying on its IGR then you will know that VAT is one the vital income generation component that no serious state should joke with

STILL BEGGING THE QUESTIONS. LET ME RESTATE THEM HERE

Let me ask you some SIMPLE QUESTIONS.
What is the VAT rate for a bag of Garri (Nigeria 's most consumed food)?
What is VAT on one Cow from Katsina?
What is VAT rate on A tuber of yam from Benue?
Your VAT collections simply means you are a NET CONSUMER.
You consume manufactured goods that are VATABLE.
You consume IMPORTED goods that are VATABLE.
You CONSUME oil and gas from Niger Delta and pay VAT.
Tell me what you produce in South West, NOTHING!

VAT, a tax payable on consumption, reflects the purchasing power and economic activity of the people in the area where it is generated. Therefore, if the South-East is generating the least VAT in Nigeria, it clearly shows that the region has the lowest level of economic activity in the country. Higher VAT collections generally indicate stronger economic activity and spending levels in the area where they are generated. Productivity cannot truly be high in a region where businesses are shut down every Monday. I think you should stop deceiving yourself.

Op is 100% right. Vat is a consumption tax. In UK once you pay for a product and you get a receipt you can see the vat rate. But in Nigeria it'd not so because companies can't separate vat payments by states so they pay at one point. Therefore lagos is a collection point for vat. Example a distributor goes to buy goods from nestle on ogun to onitsha. When he sells goods in onitsha, consumers should pay vat at point of payment but that doesn't happen so nestle has to pay the vat and include it in their cost. The same applies in all 36 states.

Validated:
You are the one NOT SMART ...Who adds the VALUE, producer or consumer? You pay for the VALUE the PRODUCER ADDED, not the consumer addition. Consumers pay VAT.

Before VAT, there was Luxury Tax on certain goods and service deemed as a luxurious and optional item. Jewellery, high end fashion, etc used to attract luxury tax as high as 25-35%.

This was mostly in Europe.

Then VAT was slowly introduced as a means of taxing every commodity and service produced and sold.

If you don't produce, you can't generate VAT. Its that simple.

In most factories, Custom and FIRS officers are deployed to take note of production amounts and from there, the company is expected to pay VAT on each unit item produced which will be passed on to the end consumer.

In the case of the SE, there hardly any production and most of the population has since migrated out ,seeing to very low rate of commerce and consumption.

The only time the SE comes to life is during Christmas holidays.

Validated:
STILL BEGGING THE QUESTIONS. LET ME RESTATE THEM HERE

Let me ask you some SIMPLE QUESTIONS.
What is the VAT rate for a bag of Garri (Nigeria 's most consumed food)?
What is VAT on one Cow from Katsina?
What is VAT rate on A tuber of yam from Benue?
Your VAT collections simply means you are a NET CONSUMER.
You consume manufactured goods that are VATABLE.
You consume IMPORTED goods that are VATABLE.
You CONSUME oil and gas from Niger Delta and pay VAT.
Tell me what you produce in South West, NOTHING!

Ondo State alone produces more oil than the combined output of all the South-East states. Go and verify it.

nedu666:
Op is 100% right. Vat is a consumption tax. In UK once you pay for a product and you get a receipt you can see the vat rate. But in Nigeria it'd not so because companies can't separate vat payments by states so they pay at one point. Therefore lagos is a collection point for vat. Example a distributor goes to buy goods from nestle on ogun to onitsha. When he sells goods in onitsha, consumers should pay vat at point of payment but that doesn't happen so nestle has to pay the vat and include it in their cost. The same applies in all 36 states.

Thank you ... Nigeria have a lot of educated illitrates. Just as in UK, in Canada HST or GST is provincial tax. Some provinces charge 8%, others as high as 15%. In Nigeria, MTN generates VAT in all states and remit in Lagos. Then one illiterate will say Lagos is feeding others.

Validated:
STILL BEGGING THE QUESTIONS. LET ME RESTATE THEM HERE

Let me ask you some SIMPLE QUESTIONS.
What is the VAT rate for a bag of Garri (Nigeria 's most consumed food)?
What is VAT on one Cow from Katsina?
What is VAT rate on A tuber of yam from Benue?
Your VAT collections simply means you are a NET CONSUMER.
You consume manufactured goods that are VATABLE.
You consume IMPORTED goods that are VATABLE.
You CONSUME oil and gas from Niger Delta and pay VAT.
Tell me what you produce in South West, NOTHING!

You are not making sense, most things you mentioned above are not VATable.

There's no vat on the maize you farm.

If the maize is taken to my state and a company there processed it into conflake and distribute into supermarkets, then the company generate VAT out of the raw materia turned into finished product

The state that has the company that process the corn and the supermarket with high disposable income that sells the finished products generate VAT

The company grows
The supermarket grows
The people consume quality flakes
The government of the state makes more money for development
The entire state benefit and grow

That is why it is called VALUE ADD TAX

Validated:
You are the one NOT SMART ...Who adds the VALUE, producer or consumer? You pay for the VALUE the PRODUCER ADDED, not the consumer addition. Consumers pay VAT.

Mr Man, you are NOT smart.
Embrace your ignorance and LEARN!

VAT is paid on RAW MATERIALS and SEMI-FINISHED goods. Not just finished goods.

Consumers are NOT the only ones who pay VATs.
Producers and Manufacturers do too.

That is why VAT is linked to supply regardless of who the buyer is.

Learn!

Kdon2:
This must be obi people🤣

Why not engage him intellectually? Are you not educated?

DomPerignon:
Before VAT, there was Luxury Tax on certain goods and service deemed as a luxurious and optional item. Jewellery, high end fashion, etc used to attract luxury tax as high as 25-35%.

This was mostly in Europe.

Then VAT was slowly introduced as a means of taxing every commodity and service produced and sold.

If you don't produce, you can't generate VAT. Its that simple.

In most factories, Custom and FIRS officers are deployed to take note of production amounts and from there, the company is expected to pay VAT on each unit item produced which will be passed on to the end consumer.

In the case of the SE, there hardly any production and most of the population has since migrated out ,seeing to very low rate of commerce and consumption.

The only time the SE comes to life is during Christmas holidays.

Please, VAT is different from EXCISE DUTIES. Do not mix it up. Input VAT is determined by your purchase invoices. Output VAT is determined by your sales invoices. As a producers, you NET your output minus your input to get what you pay. Most production or manufacturers have more inputs than output, so submit ZERO returns and carry over unutilized inputs.
It is the FINAL CONSUMER that pays the VAT.

Validated:
Thank you ... Nigeria have a lot of educated illitrates. Just as in UK, in Canada HST or GST is provincial tax. Some provinces charge 8%, others as high as 15%. In Nigeria, MTN generates VAT in all states and remit in Lagos. Then one illiterate will say Lagos is feeding others.

Collecting VAT from POS has its logistical nightmares owing to retail outlets not being properly regulated , lax in LG VAT and tax drive and the fact that most retail outlets operate within the grey sector.

By collecting VAT from local production and import points (Port taxes), the FG is able to plug the loophole.

VAT generated by Delta and Rivers state from oil export alone is from locally produced oil from the state. If Rivers and Delta were to keep half of that VAT and given the high volume being exported, do you think your SE region will be receiving 270% of what was generated and contributed to the VAT base?

The current system is meant to encourage states from attracting investors so as to increase production base and provide employment.

SE has continuously been at the bottom when it comes to attracting both local and foreign direct investment.

A combination of hostility towards foreign investment , high crime rate and very aggressive and high corporate tax rates and multiple taxation has made SE a no go area for investors plus the fact that the region has a net negative migration seeing to low purchasing power.

Validated:
Please, VAT is different from EXCISE DUTIES. Do not mix it up. Input VAT is determined by your purchase invoices. Output VAT is determined by your sales invoices. As a producers, you NET your output minus your input to get what you pay. Most production or manufacturers have more inputs than output, so submit ZERO returns and carry over unutilized inputs.
It is the FINAL CONSUMER that pays the VAT.

Excise duty are licence tax paid to the govt for producing certain goods.

Alcohol and Tobacco attract Excise duties and also high VAT rates.

There's also the not so recently introduced Sugar tax which companies like NBS are expected to pay.

Excise duties are not VAT .

While every production and service are expected to pay VAT not every production line pays Excise duties.

Namaster:
OP is NOT a very smart person!

It's LITERALLY in the name—VALUE ADDED TAX.

How clearer can it be?!

Furthermore, this is how VAT is addressed in Section 145 of the NTA 2025:

VAT shall be paid on all taxable supplies in Nigeria.

For those like OP who have a hard time understanding simple English, supplies means a Supplier or business entity is engaged in productive economic activity is selling.

The Law was specifically worded to target SUPPLIER.

It is SUPPLIERS who collect VATs on behalf of the tax authorities. In fact, suppliers who FAIL to collect VAT would be in serious LEGAL trouble.

OP's arguments that the VAT reflects just consumption is absolute MADNESS.

If there is an EXTREMELY productive state in Nigeria, their VATs would reflect it.
Because the people who are doing the production would be the people who are collecting the VATs.
And the VATs would reflect in the collections of that state.

VAT is a very NICE picture of the productivity of states in Nigeria.

If OP doesn't like the picture, that SUCKS for him.
But that is NOT an excuse to spread FAKE information.

Based on your analysis you are not smart yet you are telling op he is not smart. If the supplier collect vat on behalf of the govt, do they differentiate which state buys what. If I go to nestle as distributor and buy goods, how will nestle know where I am selling my goods. I can decide to supply different wholesalers and retailers across states. So therefore the vat paid by nestle in ogun doesn't mean that all his products are consumed in ogun. Vat should be paid by consumer not producer.

Namaster:
Mr Man, you are NOT smart.
Embrace your ignorance and LEARN!

VAT is paid on RAW MATERIALS and SEMI-FINISHED goods. Not just finished goods.

Consumers are NOT the only ones who pay VATs.
Producers and Manufacturers do too.

That is why VAT is linked to supply regardless of who the buyer is.
Learn!

Another learner ... Go and verify from all manufacturers. Input VATs are mostly higher than output VAT. Let me educate you. Your inputs include materials, overheads (utilities - generation of electricity, water, sewage, etc), which forms about 70% of total cost to make. These carry INPUT VATS. when they sell, they generate output VAT, which might be additional 30% of valu. Now, this operation is continuing and so the manufacturers has inventory for 3 months production. Hence INPUT VATs are generally higher than OUTPUT VAT. Meaning, they submit ZERO VAT RETURNS.
When you buy the goods, you pay the VAT on 100% of the VALUE.

DomPerignon:
Collecting VAT from POS has its logistical nightmares owing to retail outlets not being properly regulated , lax in LG VAT and tax drive and the fact that most retail outlets operate within the grey sector.

By collecting VAT from local production and import points (Port taxes), the FG is able to plug the loophole.

VAT generated by Delta and Rivers state from oil export alone is from locally produced oil from the state. If Rivers and Delta were to keep half of that VAT and given the high volume being exported, do you think your SE region will be receiving 270% of what was generated and contributed to the VAT base?

The current system is meant to encourage states from attracting investors so as to increase production base and provide employment.

SE has continuously been at the bottom when it comes to attracting both local and foreign direct investment.

A combination of hostility towards foreign investment , high crime rate and very aggressive and high corporate tax rates and multiple taxation has made SE a no go area for investors plus the fact that the region has a net negative migration seeing to low purchasing power.

You even have time to breakdown the explanation so he can comprehend, but trust me, he will come up with another lame excuse just to justify the poor revenue generation capability of his region and overall poor performance of its economy

DomPerignon:
Collecting VAT from POS has its logistical nightmares owing to retail outlets not being properly regulated , lax in LG VAT and tax drive and the fact that most retail outlets operate within the grey sector.

By collecting VAT from local production and import points (Port taxes), the FG is able to plug the loophole.

VAT generated by Delta and Rivers state from oil export alone is from locally produced oil from the state. If Rivers and Delta were to keep half of that VAT and given the high volume being exported, do you think your SE region will be receiving 270% of what was generated and contributed to the VAT base?

The current system is meant to encourage states from attracting investors so as to increase production base and provide employment.

SE has continuously been at the bottom when it comes to attracting both local and foreign direct investment.

A combination of hostility towards foreign investment , high crime rate and very aggressive and high corporate tax rates and multiple taxation has made SE a no go area for investors plus the fact that the region has a net negative migration seeing to low purchasing power.

What a load of bunkum. If rivers and all oil producing states were to keep their revenue where would the remaining states see revenue to share. You talk like other states don't collect oil revenue.

Validated:
Another learner ... Go and verify from all manufacturers. Input VATs are mostly higher than output VAT. Let me educate you. Your inputs include materials, overheads (utilities - generation of electricity, water, sewage, etc), which forms about 70% of total cost to make. These carry INPUT VATS. when they sell, they generate output VAT, which might be additional 30% of valu. Now, this operation is continuing and so the manufacturers has inventory for 3 months production. Hence INPUT VATs are generally higher than OUTPUT VAT. Meaning, they submit ZERO VAT RETURNS.
When you buy the goods, you pay the VAT on 100% of the VALUE.

Without production you won't have VAT.

The input VAT you refer to here is paid for acquiring raw materials, electricity and other utility and overhead expenses which include insurance, legal fees, loans etc.

In Europe with its highly regulated retail chain, output Tax is collected at POS while input is collected at point of production.

In Nigeria were regulation is lax and most retailers are operating within the grey sector, both input and output VAT are collected at point of production.

Validated:
Another learner ... Go and verify from all manufacturers. Input VATs are mostly higher than output VAT. Let me educate you. Your inputs include materials, overheads (utilities - generation of electricity, water, sewage, etc), which forms about 70% of total cost to make. These carry INPUT VATS. when they sell, they generate output VAT, which might be additional 30% of valu. Now, this operation is continuing and so the manufacturers has inventory for 3 months production. Hence INPUT VATs are generally higher than OUTPUT VAT. Meaning, they submit ZERO VAT RETURNS.
When you buy the goods, you pay the VAT on 100% of the VALUE.

Oga tell them. Dumb people will be forming smart