Firms’ Income Tax Drops 12% Amid Declining Profit

Company Income Tax (CIT) paid by local and foreign companies in Nigeria declined by 12 per cent in the first quarter of 2024, data from the National Bureau of Statistics (NBS) has shown.

The decline is attributed to a combination of factors, including the ongoing economic challenges and the increasing difficulty for businesses to stay afloat. Many companies are struggling to maintain profitability due to rising costs, inflation, and other economic pressures.

The latest CIT report released by the NBS on Tuesday, showed that revenue to the federal government declined to N984.61 billion in Q1 from N1.13 trillion in the previous quarter.

“Local payments received were N386.49 billion, while Foreign CIT Payment contributed N598.13 billion in Q1 2024,” it disclosed.

CIT which is also known as corporate tax is a levy the government imposes on the income of a company.

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The CIT rate is hinged on zero per cent for companies with gross turnover of N25 million or less, 20 per cent for companies with gross turnover greater than N25 million and less than N100 million, and 30 per cent for large companies above N100 million.

Since President Bola Tinubu announced petrol subsidy removal during his inauguration on May 29, pump prices have more than tripled to over N600, while the value of the naira has plunged following the floating of the currency sparking a bloodbath in the bottom lines of companies operating in Nigeria.

Companies in the country have had their bottom lines hit by the devaluation of the naira currency with some recording losses.

Further analysis of the NBS report disclosed that in terms of contribution, Mining, and quarrying contributed N80 billion; Financial and insurance activities with N72.4 billion, and Information and communication with N48.5 billion.

Also, revenue from government tax on value-added tax rose by 19.21 percent on a quarter-on-quarter basis to N1.43 trillion in Q1 from N1.20 trillion in Q4 2023.

The report disclosed that “Local payments recorded were N663.18 billion, Foreign VAT payments were N435.73 billion, while import VAT contributed N332.01 billion in Q1 2024.”