The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele has stated that the federal government hopes to reduce company income tax in the coming years.
He stated this during his presentation at the Access Corporate Forum 2024 organised by Access Holdings Plc in Lagos.
According to him, the federal government is looking to reduce the tax burden on businesses whilst prioritising collection efficiency to increase government revenues.
He stated, “Like the honourable Minister said, we are also reducing the corporate income tax rate from where it is now to a much lower rate in the next one to two years”
In Nigeria, companies are subject to three Corporate Income Tax (CIT) rates based on their turnover: 30% for large companies with a turnover exceeding N100 million, 20% for medium companies with a turnover between N25 million and N100 million, and 0% for small companies with a turnover below N25 million.
However, it could also attract investors into the country- a high desire for the federal government.
New VAT regime
Furthermore, he also stated plans to eliminate taxes on basic items used by individuals daily such as food, education, transport and others. According to him, the elimination of taxes on these items will encourage production and reduce inflation.
He also noted that under the proposed Value Added Tax (VAT) regime, businesses would be able to recover input credits on their assets and services, which would help reduce inflation and eliminate VAT costs borne by businesses.
What you should know
The National Bureau of Statistics (NBS) reports that Nigeria’s Company Income Tax (CIT) collection surged by 150.83% in the second quarter of 2024, reaching N2.47 trillion. This marks a significant increase from the N984.61 billion collected in the first quarter of the year, where there was a 12% decline from Q4 2023.
- The sharp rise in Q2 CIT collection was largely driven by a notable 87.24% increase in foreign CIT payments, totalling N1.11 trillion, more than double the amount recorded in the same period last year. This is owing to the foreign exchange unification policy which saw the Naira lose over 100% of its value since its enactment.
- Foreign companies have reaped the benefits of FX unification, while local businesses have encountered more difficulties.
- Foreign Company Income Tax (CIT) jumped by 140.5%, increasing from N1.42 trillion in the pre-unification year (Q3 2022 to Q2 2023) to N3.41 trillion in the post-unification year. In comparison, local CIT saw a more modest growth of 35.1%, rising from N2.16 trillion to N2.92 trillion during the same period.