• Tuesday, April 23, 2024
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Foreign firms’ tax payments to FG drop 45% in three months

Foreign firms’ tax payments to FG drop 45% in three months

Tax payments from foreign companies in Nigeria dropped by 45.3 percent within three months, according to the latest Company Income Tax (CIT) report by the National Bureau of Statistics.

The report showed that the tax revenue to the Federal Government declined to N596.1 billion in the fourth quarter of last year from N1.09 trillion in the previous quarter. While for the full year, it surged by 108 percent to N2.39 trillion.

“CIT for Q4 was reported at N1.13 trillion, indicating a growth rate of –35.40 percent on a quarter-on-quarter basis from N1.75 trillion in Q3. Local payments received were N533.93 billion, while Foreign CIT Payment contributed N596.10 billion in Q4,” the NBS report said.

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

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

The NBS report also revealed that the tax revenue from both local and foreign firms in Africa’s biggest economy grew by 72.8 percent to N4.89 trillion last year from N2.83 trillion in 2022.

In terms of contribution, manufacturing activities contributed the most tax revenue to the government with N626.4 billion followed by information and communication (N466.6 billion) and financial and insurance activities (N428.8 billion).

“The tax collection efficiency has improved due to its technology called TaxPro-Max. It has been able to capture people that have been evading taxes for years,” Damilare Asimiyu, macroeconomic strategist and head of investment research at Afrinvest West Africa Limited said.

The Federal Inland Revenue Service, in 2021, introduced TaxPro-Max, a tax administration solution for the ease of tax compliance. The technology enables seamless registration, filing, payment of taxes, and automatic credit of withholding tax as well as other credits to the taxpayer’s accounts among other features.

During the public presentation of the country’s 2024 Budget Proposals last November, Abubakar Bagudu, minister of budget and economic planning, revealed that the federal government achieved N8.65 trillion in revenue in the first nine months of this year from its pro-rata target of N8.28 trillion.

Out of the N8.65 trillion revenue, N1.42 trillion was generated from oil revenues, while non-oil revenues totalled N2.50 trillion.

In January, the FIRS said it collected a record N12.4 trillion in tax revenue for the federation in 2023, surpassing its target of N10.7 trillion.

Taiwo Oyedele, president of the Presidential Tax Reform Committee last year, said Nigeria’s total tax incentive to companies is about N6 trillion annually.