How manufacturing industry drove company income tax in Q1

The manufacturing sector was the key contributor to Nigeria’s Company Income Tax (CIT) revenue in the first quarter (Q1) 2022, data gleaned from the National Bureau of Statistics (NBS) has shown.

According to NBS, CIT rose by 53.09 percent to N532.5 billion from N347.81 billion in the previous quarter (Q4,2021).

The manufacturing sector contributed the most by 21.31 percent totalling N44.56 billion, although a decline of 1.17 percent from Q4 2021 when N45.09 billion was recorded.

This is despite the grappling challenges the sector is facing, particularly the availability of FX for the import of raw materials and machines.

“The foreign exchange shortage has gradually worsened because financial institutions do not have enough to go round and manufacturers keep going back to the black market to source FX at exorbitant rates which is not sustainable,” Frank Onyebu, chairman of the Manufacturers Association of Nigeria (MAN), Apapa branch said.

Analysts have said the increase in CIT depicts an improvement in economic and business activities in the country but it is still below its potential.

“CIT now reaching record levels is an indication that businesses have recovered from the adverse impact of the pandemic and that activities in the business and economic environment have significantly normalized,” said Damilola Adewale, a Lagos-based economic analyst.

Likewise, on a year-on-year basis, CIT revenue increased by 35.61 percent from N392.7 billion in Q1 2021. CIT which is also known as corporate tax is a levy the government imposes on the income of a company.

The CIT 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.