Company Income Tax (CIT) collection in the first three months declined by 12.87% from N1.13 trillion recorded in Q4, 2023 to N984.61 billion.
This is according to the National Bureau of Statistics, (NBS) CIT report for Q1 2024.
The report reveals that CIT collection across agriculture, manufacturing, Electricity, gas, steam, real estate, and professional services all declined by double digits in the first quarter of the year.
Despite the quarterly decline, total CIT collection on a year-on-year basis rose by 109.93% from N469.01 billion in Q1, 2023 to the current figure.
Local payments received were N386.49 billion, while Foreign CIT Payment contributed N598.13 billion in Q1 2024. It is the first-time foreign CIT payment will trump local CIT payment since Q4, 2022.
In the period under review, there was a 27.61% decline in CIT payment by local Nigerian companies from N533.9 billion in Q4, 2023 to the current figure. However, there was a marginal increase of 0.34% in CIT payment by foreign companies.
Growth rate across sectors
Quarter-on-quarter, the highest growth rate was recorded in activities of households as employers and undifferentiated goods- and services-producing activities for household use, which saw an increase of 330.42%. This was followed by administrative and support service activities, which grew by 33.18%.
Conversely, Manufacturing activities had the lowest growth rate at –70.24%, followed by electricity, gas, steam, and air conditioning supply at –69.14%, agriculture at –59.31%, real estate services at –40.6, transport at –45.49%.
In Q1 2024, the top three sectors in terms of contributions were Mining and Quarrying at 20.94%, Financial and Insurance Activities at 18.73%, and Information and Communication at 12.56%.
On the lower end, Activities of Households as Employers and undifferentiated goods- and services-producing activities for household use had the smallest share at 0.02%, followed by Water Supply, Sewerage, Waste Management, and Remediation Activities at 0.07%, and Activities of Extraterritorial Organizations and Bodies at 0.24%.
Economic implication of the decline
The decline in company income tax collection especially in important sectors like manufacturing, agriculture, information and communication services, construction, and others paints a grim picture of the condition of the real economy in Nigeria.
Declining tax payments by companies mean a drop in revenue, profit or sales which is likely probable considering the high inflation rate and prevailing cost of living crisis. Inflation stood at 33.2% at the end of the quarter, greatly stifling the purchasing power of consumers.
Nigeria’s PMI rose to 54.4 in January, although businesses during the period reported transport cost and exchange rate problems affecting business activities during the period. In February, PMI dropped to 51.0 as exchange rate weakness pushed input cost to the highest in 10years.
In March, the country’s Purchasing Managers’ Index remained unchanged as business noted limited demand on the back of high prices.
- The last decline in company income tax was in the first quarter of 2023 where CIT collection dropped by 37.7% from N769.88 billion to N469.01 billion. Although the decline was the second consecutive from N810.19 billion recorded in Q3, 2023.
- Worthy of note is that during the period of the last decline, Nigeria witnessed the infamous cash scarcity following the CBN’s naira redesign fiasco and tepid investment climate with the 2023 general election occurring during the quarter. This negatively affected business activities during the period.
