Tax payments from local companies in Nigeria saw a massive 249.2 percent jump in the second quarter (Q2) of 2024, according to the latest company income tax (CIT) report by the National Bureau of Statistics (NBS).
The CIT, also known as corporate tax, is levied on the profits made by companies operating in Nigeria. It is regulated by the Companies Income Tax Act (CITA) and enforced by the Federal Inland Revenue Service (FIRS).
Currently, the tax is charged at 30 percent for companies with more than N100 million in turnover, and 20 percent for companies with a turnover ranging between N25 million and N100 million.
NBS said local companies contributed N1.35 trillion in taxes to the federal government in Q2, compared to N386.49 billion in the previous quarter.
While foreign firms operating in Nigeria contributed N1.12 trillion in Q2 — an increase of 87.2 percent compared to the N598.13 billion reported in Q1.
BREAKDOWN OF PERFORMANCE BY SECTOR
The NBS report showed that the agricultural sector contributed the highest company income tax in Q2, showing a remarkable 474.50 percent increase from the previous quarter.
“On a quarter-on-quarter basis, agriculture, forestry, and fishing recorded the highest growth rate with 474.50%, followed by financial and insurance activities and manufacturing with 429.76% and 414.15%, respectively,” the report said.
Several sectors experienced a decline in company income tax payments during the quarter under review.
“On the other hand, activities of households as employers, undifferentiated goods- and services-producing activities of households for own use, had the lowest growth rate with -30.22%, followed by activities of extraterritorial organizations and bodies with -15.67%,” NBS said.
N20.68 TRILLION IN CORPORATE TAXES FROM 2015 TO 2024
Analysis by TheCable Index showed that Nigeria’s corporate tax revenue has experienced remarkable growth over the past decade.
From 2015 to 2024, the country amassed a total of N20.68 trillion in corporate taxes.
In 2015, the federal government collected N1.38 trillion in corporate taxes, however, in 2016, the revenue decreased to N1.02 trillion.
The decline halted in 2017, as the CIT collected by the government climbed to N1.24 trillion.
The upward trend continued, with N1.42 trillion CIT collected in 2018 and N1.63 trillion in 2019.
However, it declined to N1.41 trillion in 2020 but increased to N1.69 trillion in 2021.
The growth continued in 2022, with collection reaching N2.83 trillion, climbing further to N4.89 trillion in 2023.
For the first half of 2024, the total company income tax collected stood at N3.45 trillion.
LOCAL FIRMS LEAD CIT PAYMENTS
Further analysis showed that over the past decade — excluding 2015 — local companies have paid more CIT than foreign firms operating in Nigeria.
In 2015, local companies paid N645.68 billion in corporate tax, while foreign firms contributed N715.52 billion.
However, in 2016, local payments surpassed that of foreign firms, as the former paid N620.78 billion, while CIT from the latter was N360.23 billion.
This trend continued in 2017, with local companies paying CIT of N666.79 billion, compared to the N489.90 billion paid by foreign firms.
In 2018, CIT from local and foreign firms amounted to N709.94 billion and N534.96 billion, respectively.
The amount increased in 2019, as the government collected N813.17 billion from local firms and N615.52 billion from foreign firms.
By 2020, payments from both local and foreign firms decreased to N628.58 billion and N317.25 billion, respectively.
However, in 2021, company income tax collected from local firms crossed the N1 trillion mark, reaching N1.10 trillion, while foreign firms paid N527.62 billion.
In 2022, local and foreign firms CIT rose to N1.68 trillion and N1.15 trillion, respectively.
By 2023, both local and foreign firms’ CIT had surpassed N2 trillion, with local firms paying company income tax of N2.51 trillion and foreign firms parting with N2.39 trillion.
Although 2024 data only covers the first half of the year, the current payments of N1.74 trillion for local firms and N1.72 trillion for foreign firms indicate an upward trend for the remainder of the year.
The Cable
