11 Deposit Money Banks (DMB’s) listed on the Nigerian Stock Exchange (NSE) have reported a total of N64.557 billion in taxes for the first half of the year, 2018.
The banks include Zenith Bank, Guaranty Trust Bank, Ecobank Transnational Corporation (ETI), Stanbic IBTC Group, FBN Holdings, FCMB Group and Diamond Bank.
Others are Wema Bank, Union Bank of Nigeria, Sterling Bank and Jaiz Bank.
The figure represents a 13.43 per cent increase from the N56.916 billion paid by the 11 banks in half year, 2017. The 11 banks also reported a total pre-tax profits of about N382.853 billion for the period under review.
Companies Income Tax (CIT) is tax on the profits of incorporated entities in Nigeria. It also includes the tax on the profits of non-resident companies carrying on business in Nigeria. The tax is paid by limited liability companies inclusive of the public limited liability companies. It is therefore commonly referred to as corporate tax.
CIT was created by the Companies Income Tax Act (CITA) 1979 and has its root from the Income Tax Management Act of 1961. It is one of the taxes administered and collected by the Federal Inland Revenue Service (FIRS). Nigeria has a corporate tax rate of 30 per cent.
According to LEADERSHIP findings, Zenith Bank paid the highest tax at about N25.6 billon from a pre-tax profit of N107.358 billion. Guaranty Trust Bank followed with a tax payment of N14.051 billion from a profit before tax of N109.6 billion, while Ecobank Transnational Corporation (ETI) paid tax of N13.707 billion after posting a profit before tax of N65.099 billion.
Stanbic IBTC Groups paid tax of N7.646 billion from a pretax profit of N50.730 billion, FBN Holdings declared a tax of N1.309 billion from a profit after tax of N20.061 billion, FCMB Groups paid tax of N928.833 million from a profit before tax of N1.10 billion and Diamond Bank paid tax of N470 million with a pre-tax profit of N2.9 billion.
Others are Wema Bank, Union Bank of Nigeria, Sterling Bank and Jaiz Bank which paid tax of N244.926 million, N206 million, N149 million and N24.525 million respectively, from a profit before tax of N1.81 billion, N11.664 billion, N6.3 billion and N231.215 million in that order.
The importance of taxation to a nation’s economic wealth and development cannot be overemphasised. However, the achievement of this goal is often undermined by tax evasion and deliberate attempts by multinationals to shift profits from one jurisdiction to another, amongst others.
Over the years, Nigeria has attempted to use taxation as a compulsory tool for revenue generation needed to meet its recurrent and capital requirements; however, there is no evidence that this has yielded the desired results.
Nigeria has the lowest tax to GDP ratio in comparison to Kenya and South Africa. This may be attributed to factors such as; lack of expansion of the tax net, partial enforcement of compliance, bureaucratic tax procedures, lack of transparency and accountability. These factors are in no way strange to the government and tax authorities as some efforts have been made over the years to curb them, expand the tax net and increase tax collection.
Capital market analysts said quoted companies, especially the banks have operated transparency in their financial reports and paid appropriate tax required.
They are of the view that the tax paid by companies depend on an impressive performance that will increase their contributions as tax.
The managing director/chief executive officer of Trust Yields Securities Limited, Alhaji Rasheed Yussuff said that “it is evident that listed companies on the NSE pay more corporate tax to the federal government due to their high level of transparency, financial disclosure and corporate governance than unlisted companies.”
Speaking in the same vein, the managing director of HighCap Securities Limited, Mr. David Adonri said listed companies are capable of boosting government revenue accruable from taxes following the requirements for improved disclosure from the NSE, Securities and Exchange Commission (SEC) and other regulators.
The chief operating officer of InvestData Consulting Limited, Ambrose Omordion, said new listings on the NSE will help the federal government to generate more tax returns. He said being listed on the NSE makes it possible for the government to have visibility in the operations of the company, as well as the general public. Listing enables the government to assess possible tax returns and monitor same.
In July, 2017, the federal government launched Voluntary Assets and Income Declaration Scheme (VAIDS) as a way of raking in more revenue. The emergence of VAIDS outlines the federal government’s plan to increase tax awareness and compliance.
The federal government said VAIDS is a time-limited opportunity for taxpayers to regularise their tax status relating to previous tax periods and pay any taxes due. In exchange for fully and honestly declaring previously undisclosed assets and income, tax payers benefit from forgiveness of overdue interest and penalties, and the assurance they do not face criminal prosecution for tax offences or tax investigations.