Foreign firms’ tax to FG rises by 44% in nine months

Tax payments from foreign companies in Nigeria have surged by 44 percent in the nine months to September 2024, according to a report by the National Bureau of Statistics (NBS).

According to the Company Income Tax report by the statistics agency, revenue to the Federal Government rose to N2.57 trillion in 9’M from N1.79 trillion in the same period last year.

On a quarterly basis, Nigeria’s earnings from foreign companies’ CIT increased by 42.49 percent from N598.1 billion in Q1 to N1.12 trillion in Q2 but slowed to N852.3 billion in Q3, suggesting a tough economic condition.

According to the Federal Inland Revenue Service, CIT is a 30 percent tax imposed on companies’ profit, and VAT is a 7.5 percent consumption tax paid when goods are purchased, and services are rendered.

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Foreign companies like Google, Netflix, Meta, Facebook, and other service providers, which are video streaming sites, social media platforms, and companies that offer downloads of digital content, are expected to pay digital tax to the Federal Inland Revenue Service.

However, these companies in Africa’s biggest economy had their bottom lines hit by the devaluation of the naira currency with some recording losses and some had a significant increase in nine months of 2024.

Companies like Netflix have lamented reduced patronage, reflecting the economic situation of the country where inflation is hammering the spending power of the citizens and making them prioritise their spendings.

However, further analysis of the NBS report showed that revenue from government tax on value-added tax rose by 157.03 percent to N1.28 trillion in nine months of 2024 from N498.3 billion in the same period last year.

VAT collection data revealed that Nigeria earned N435.7 billion in Q1, N395.7 billion in Q2, and N448.9 billion in Q1 2024.

In nine months, both taxes from foreign companies operating in Nigeria reflected a 68.1 percent surge to N3.85 trillion compared to N2.29 trillion paid in nine months of 2023.