Based on the data published by the National Bureau of Statistics (NBS), the gross Company Income Tax (CIT) collected in Q4 2021 amounted to N347.81bn, a sharp 26.4% q/q decline compared with N472.52bn in Q3 2021. Nevertheless, the total gross CIT collection in 2021 was N1.69tn, up by 19.6% y/y compared with N1.41tn in 2020 and the highest amount of CIT collected since the official publication began in 2015.
Also, when compared with the budgeted net revenue of N681.7bn from CIT in 2021, the actual net revenue of N718.6bn as reported by the Budget Office of the Federation for January to November already beats the budgeted revenue by 5.4%, implying the country’s fiscal position received a boost in the year, supported by the continued macroeconomic recovery.
In Q4 alone, the decline in CIT collections in Q4 2021 was broad-based as revenue from both Local and Foreign sources went downhill, with the latter (-56.1% q/q) declining more than the former (-4.1% q/q). In terms of the contribution to CIT revenue in Q4 2021, CIT from local companies contributed N258.8bn (74%), leaving revenue from Foreign CIT Payments to plug the balance (N89.0bn; 26%).
For local CIT payments, based on the classifications made available by NBS, Information and Communication (N51.1bn), Professional Services (N130.1bn), Manufacturing (N45.1bn) and Financial & Insurance activities (N31.1bn) contributed the most to collections in Q4 2021.
The full-year gross CIT revenue (N1.69tn) generated in 2021 is commendable in our view and a reminder that CIT collection is a major part of non-oil revenue for the government, which can grow if efforts are harnessed on resolving some of the agelong issues affecting the business environment and dragging profitability.
Similarly, while the full year VAT data is unavailable as of writing, VAT revenue is certainly on course for an impressive outing, benefitting from a quickened recovery in consumer spending. Even as of November 2021, the actual VAT Revenue of N360.5bn outperforms the 2021 budgeted VAT revenue by 1.5x.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.