Nigeria recorded a sum of N347.81 billion as company income taxes in the fourth quarter of 2021, dropping by 26.4% compared to N472.52 billion generated in the previous quarter.
This is contained in the recently released company income tax report released by the National Bureau of Statistics (NBS).
According to the report, a total of N258.85 billion was collected from companies operating within the country, while the remaining N88.96 billion was recorded as foreign CIT payments.
Although the company income taxes recorded in the period declined compared to the previous quarter, it is 17.6% higher than the N295.72 billion recorded in the corresponding period of 2020.
On an annual basis, Nigeria generated the highest annual company income tax revenue based on data from Q1 2015 with N1.69 trillion, representing 19.6% and 3.6% increase compared to N1.41 trillion and N1.63 trillion recorded in the previous year and 2019 respectively.
The significant decline recorded in the period under review is attributable to the N113.62 billion drop in foreign CIT payments. Notably, foreign company income taxes dropped from N202.58 billion recorded in Q3 2021 to N88.96 billion in Q4 2021.
Top sectors with highest CIT remittance
The information and communication sector led the list with N51.1 billion in income tax paid to the federal government. This is unsurprising, considering the billions before taxes made by telco giants in the country. Some of which includes, MTN Nigeria, Airtel, Glo, amongst others.
The manufacturing sector followed with N45.09 billion paid as company income tax, which represents a decline of N13.63 billion compared to the N58.72 billion recorded in the previous period. Also, the financial and insurance sector remitted a sum of N31.06 billion as company income tax.
Meanwhile, the public administration sector recorded the highest increase in the amount of CIT remittance with N23.66 billion, which is N5.38 billion higher than the N18.28 billion remitted in the previous quarter (Q3 2021).
Other sectors, which ramped up effort with their taxes include services. electricity, professional services, construction, and trade (wholesale and retail).
Why this matters
Nigeria’s problem in recent times has been attributed to a revenue crunch, which has affected the federal government’s capability to finance its budget, hence, resulting in more debt acquisition. This has also been further affected by the decline in crude oil earnings, due to the inability of Nigeria to meet production quota.
Another factor affecting Nigeria’s revenue is the continuous payment of fuel subsidy which gulps a significant portion of the country’s income. Therefore, it becomes imperative for Nigeria to improve its non-oil revenue in order to compensate for its oil revenue underperformance.
Although the decline recorded in the fourth quarter is worrisome, 2021 as a whole is a record-making year in terms of collection of company income taxes for Nigeria.