The economy expanded by only 1.9 percent in 2018 but the government is not feeling the pinch just yet. Despite the economic performance, taxes paid by 30 of the largest publicly listed companies are set to reach N181 billion for 2018 financial year, a decline of about 21 percent of last year’s tax bill.
The decline in tax expense came despite the strong earnings performance observed in companies that have already posted their 2018 results and annualised performance of companies yet to officially release their 2018 financial performance. Profit before tax for the 30 largest companies for 2018 is expected to be N1.49 trillion, compared with the N1.2 trillion achieved in 2017, representing a growth of 20.22 percent.
The Federal Government projected to receive N779 billion in corporate income tax but could see as few as 30 companies contributing up to 25 percent of corporate tax revenue, showing how important these companies are to the government achieving its fiscal objectives.
The 30 publicly listed companies with the highest tax bills in the country are SEPLAT (N35.7bn), Zenith (N34.2bn), GTB (N30.9bn), ETI (Est. N27.6bn) and UBA (Est. N23.1bn), while the lowest tax bill in the NSE 30 are Sterling Bank (Est.N395.01m), PZ (Est. N386.39m) and UBN (Est. N256.69m).
In 2017, the NSE 30 firms paid a combined tax expense of N229.168 billion and since one of the highest income-generating companies in Nigeria, Dangote Cement, posted a tax credit of N89.08 billion from NIPC, the total sum of income tax to be collected for the 2018 calendar year is estimated to be 20.97 percent less than the amount generated in the previous year.
The banking industry in the NSE 30 is estimated to contribute a whooping N143.48 billion of the total N181 billion tax expense paid in the 2018 calendar year. This represents 79.28 percent of the total tax to be generated from the top 30 firms in the country.
According to a PWC article on the tax environment in Nigeria, there is a low level of tax compliance that can be attributed to a number of factors including incoherent fiscal policies, the cumbersome and inefficient tax administration system, high level of tax evasion, ambiguities in the tax laws and lack of transparency regarding the utilisation of tax revenue for social services and visible development.
