There are indications from statistics that Nigeria has generated a total of N7.8 trillion from company income tax (CIT) from January 2015 till end of last quarter (Q3 2020), an analysis of relevant data has shown.
Nigerian resident companies are liable to CIT on their global income while non-resident (foreign) companies are required to pay CIT on their Nigeria-source incomes.
The breakdown of the tax earnings for the period shows that N4.08 trillion (an equivalent of 52 per cent) was received from local companies while N3.05 trillion (or 39 per cent) was the contribution of non-resident companies.
The balance, N692.2 billion, or nine per cent of the bulk, came from other sources such as e-Transact and the Government Integrated Financial Management Information System (GIFMIS). On average, the country earned N1.3 trillion per annum from CIT in the past six-year period.
In the first three quarters of 2020, the country generated approximately N1.1 trillion as against N1.3 trillion generated in the corresponding period of 2020. This year’s first nine-month CTI revenue is about N200 billion short of the amount generated in the corresponding period in 2019.
The third-quarter report released by the National Bureau of Statistics last Thursday showed that the country generated 416.01 in the last quarters (Q3 2020) compared to N402.03 billion recorded in the previous quarter (Q2 2020). The Q3 figure contracted by 20.13 per cent compared to N520.89 billion recorded in the corresponding quarter (Q3) of 2019.
Out of the N4.08 trillion CIT realised from local companies , The analysis showed that a whopping 18 per cent, translating to N741.3 billion, was realised from banks and other financial institutions, a sector that contributes less than three per cent to the country’s Gross Domestic Product (GDP).
With N933.5 billion, professional services (including telecommunications) contributed the lion’s share to the total local CIT generated in the period. Telecommunication, the major component of the professional service category, controls 11.2 per cent of the country’s GDP.
Professional services, financial institutions and breweries add less than 20 per cent to the GDP. Yet, their revenue contribution is huge. They generated over 50 per cent of total CIT paid by resident companies from 2015 till date.