Information obtained from the Nigerian Stock Exchange (NSE) has shown that 10 Nigerian companies incurred the highest tax expenses in half-year 2019. These companies, which cut across different sectors of the economy, paid a total sum of N187.2 billion.
Here are the companies: Checks by Nairametrics Research confirmed that these companies are comprised mainly of some of the biggest entities on the NSE. MTN Nigeria Plc led the list with N42.87 billion, followed by Dangote Cement Plc (N36.25 billion), and Zenith Bank Plc (N20.94 billion). Others include Guaranty Trust Bank Plc (N16.65 billion), Ecobank Transnational Incorporated (N15.14 billion), Nestle Nigeria Plc (N14.19 billion), and United Bank for Africa (N13.54 billion).
More so, Access Bank Plc expended as much as N11.09 billion paying taxes, as did Stanbic IBTC Holdings Plc which paid income taxes worth N8.4 billion. FBN Holdings Plc closed the list with N8.15 billion worth of taxes paid in H1 2019.
Based on the foregoing, it can be seen that banks make up a large percentage of companies paying the highest tax in Nigeria. Specifically, there are six banks out of the ten companies on this list.
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Top 10 companies with highest TAX expenses incurred in half-year 2019
MTN – N42.87bn
Dangote Cement –N36.25bn
Zenith Bank – N20.94bn
GTB – N16.65bn
Nestle – N14.19bn
UBA – N13.54 billion
Access Bank –N11.09bn
Stanbic IBTC –N8.4bn
FBN Holdings – N8.15bn
— Nairametrics Research (@Nigeriandata) September 24, 2019
A Breakdown of the data: As earlier stated, the sum of N187.2 billion represent the total amount paid by the above-mentioned companies. In Nigeria, Corporate Income Tax (CIT) rate is 30% of every company’s profit before tax. This money is usually collected by the Federal Inland Revenue Service (FIRS) and remitted to the Federation Account.
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It should be noted that some companies do enjoy tax holiday, an arrangement whereby the Federal Government either reduces or completely eliminates taxes for select companies. A Nigerian company can also get a tax credit, which basically has to do with the sum total that can be offset against such a company’s tax liability after it must have carried out a project on behalf of the government.
Dangote Cement Plc, for instance, incurred the cost of fixing some parts of the Apapa Expressway and got a tax credit from the Government in return. This partly explains the amount of tax the company paid in H1 2019.
Why it matters: The Federal Inland Revenue Service has one major function – generate money for the Federal Government through tax collection. To a large extent, it can be said that the tax agency has been committed to this task. FIRS’s success story can also be attributed to the compliance of such companies as the ones listed above. Therefore, the fact that these top companies are complying is something the FIRS should be impressed by.