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Nigeria’s tax revenue to GDP falls below World Bank’s ratio



Nigeria’s tax revenue to GDP falls below World Bank’s ratio

The National Bureau of Statistics (NBS) has revealed in its ‘Tax-to-GDP Ratio Revised Computation (2010-2021)’ report that Nigeria’s tax revenue to gross domestic product (GDP) is 10.86%.

In a publication on its website recently, NBS revised its initial tax-to-GDP ratio of 6% to 10.86%, stating that its findings have been updated after more information was obtained from some agencies of government.

NBS said it collaborated with the Federal Inland Revenue Service (FIRS), Joint Tax Board (JTB), Nigeria Customs Service (NCS), and the Accountant General of the Federation (OAGF), amongst other government agencies in charge of revenue collection.

Despite the increase after review, the 10.86% tax-to-GDP ratio was still below the recommendation of the World Bank, which suggests a country should have at least 15%.

The World Bank said tax revenues above 15% indicate economic growth in a country and the ability of the nation to reduce poverty.

Commenting on the new figure, the NBS said: “The new figures are revised and updated numbers to reflect better data sources and improved estimation using the Organisation for Economic Co-operation and Development (OECD) manual.

“The OECD manual is an improvement over the System of National Accounts (SNA 2008) classification of taxes.

“Although the System of National Accounts conceptual framework and its definitions of the various sectors of the economy are reflected in the OECD’s classification of taxes, the OECD classifications provide the maximum disaggregation of statistical data on what are generally regarded as taxes by tax administrations.

“The revised computation took into account wider coverage of data at the Federal, State, and Local Government levels, and revenue items not previously included in the computations, particularly, relevant revenue collected by other agencies of government.

“At the end of 2021, the tax-to-GDP ratio stood at 10.86% for Nigeria compared to an estimated 6% previously reported.”

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