Dangote Cement, NB lead consumer goods firms in tax expense

Out of seven listed consumer goods firms in Nigeria, Dangote Cement Plc, Nigerian Breweries Plc, and International Breweries Plc recorded the most tax expenses last year, a BusinessDay analysis has shown.

According to the firm’s latest financial statements, Dangote Cement had a tax expense of N97.5 billion in 2023, up from N141.7 billion in 2022. That of Nigerian Breweries rose to N38.92 billion from N4.15 billion.

International Breweries’ tax expense stood at N28.18 billion, up from N5.22 billion.

Lafarge Africa Plc recorded an income tax expense of N27.6 billion in 2023, up from N14.7 billion in 2022.

The tax expense of NASCON Allied Industries grew to N6.9 billion from N2.9 billion and that of Unilever Nigeria rose to N5.13 billion from N3.34 billion. However, BUA Foods’ tax expense dropped to N9.29 billion from N15.89 billion.

“Tax is statutory. In Nigeria, for big organisations, corporate tax is 30 percent of profit before tax. In cases where profit before tax is negative, Company Income Tax would not be charged but the firm will pay minimum tax,” Israel Odubola, a Lagos-based analyst, said.

He said the Manufacturers Association of Nigeria recently reported over 700 manufacturers that are distressed while adding that there should be relief measures for the manufacturers pending when Nigeria’s macroeconomic environment is stable.

Femi Egbesola, national president of the Association of Small Business Owners of Nigeria (ASBON), said the running cost for most manufacturers has tripled.

“Companies now spend more than ever before as their working capital to run their business, the profits are on the decline while expenditures are on the increase in which tax is a part,” he said.

“Some of these tax laws need to be reformed and reviewed. The new fiscal reforms committee by President Bola Tinuby has taken it as one of the recommendations and we hope this will come with the new tax reforms,” Egbesola added.

According to the Federal Inland Revenue Service (FIRS), the rate of Companies Income Tax is 30 percent of the total profit of a company. “Some profits are exempted from CIT provided they are not derived from trade or business activities carried out by the company.”

The Federal Inland Revenue Service has revealed plans to significantly increase its tax revenue collection by 57 percent to N19.4 trillion in 2024.

A document quoted by Bloomberg reveals that FIRS hopes to increase its oil revenues to N9.96 trillion with non-oil tax revenue at N9.45 trillion.

To achieve this, the FIRS plans to enhance efficiency and tax compliance by restructuring its organisational framework to prioritise taxpayers and implementing additional automation measures for tax collection, as outlined in the document.

It also revealed plans to carry out internal reallocation from oil to non-oil, “carry out internal reallocation from oil to non-oil, given that the budget oil revenue for 2024 was increased by 214 percent compared to 2023 actual, while non-oil was increased by only three percent.”

Last year, President Bola Tinubu appointed Taiwo Oyedele as the chair of the Presidential Committee on Fiscal Policy and Tax Reforms which has the mandate to refine the country’s fiscal policy, tax laws, and regulations, and streamline tax collection.

In the first six months of 2023, the FIRS collected tax revenue of N5.5 trillion which was a record for a half-year period and puts the agency in a position to surpass its N10.1 trillion collection for 2022.

While other firms saw an increase in tax expenses, Dangote Sugar Refinery Plc, Nestle Nigeria Plc and BUA Cement Plc received N35.2 billion, N24.5 billion and N2.27 billion in tax credits respectively. Cadbury Nigeria Plc did not record any income tax in 2023 but paid N715 million tax in 2022.

Firms analysis

Nigerian Breweries

Nigerian Breweries recorded an 837.8 percent growth in tax expense to N38.92 billion in 2023 from N4.15 billion in 2022.

The brewer recorded an after-tax loss of N106.3 billion from a profit of N13.2 billion. Revenue grew to N599.6 billion from N550.6 billion.

Net finance cost rose to N189.2 billion from N34.4 billion during the period.

The firm is the largest brewing company in Nigeria. It serves the Nigerian market and West Africa.

International Breweries

International Breweries’ tax expenses surged by 439.8 percent to N28.18 billion in 2023 from N5.22 billion in 2022.

The firm’s after-tax loss widened to N59.5 billion from N21.6 billion. Revenue grew to N264.3 billion from N218.7 billion.

The brewer’s net finance cost increased to N19.41 billion from N5.51 billion during the period.

International Breweries is a brewery in Nigeria. It began production in December 1978 with an installed capacity of 200 000 hectolitres per annum, this increased to 500 000 hl/a in December 1982.

NASCON Allied Industries

NASCON recorded a 137.9 percent growth in tax expense to N6.9 billion in 2023 from N2.9 billion in 2022.

The firm’s after-tax profit rose to N13.7 billion from N5.5 billion. Revenue from contracts with customers grew to N80.83 billion from N58.79 billion.

The salt maker’s total finance costs rose to N1.44 billion from N694.8 million during the period.

Nascon is a Nigeria-based company that is engaged in the processing of raw salt into refined, edible and graded salt. The company’s products include salt, seasoning and spices.

Lafarge Africa

Lafarge Africa recorded an 87.8 percent growth in its tax expense to N27.6 billion in 2023 from N14.7 billion in 2022.

The firm’s after-tax profit dropped to N51.14 billion from N53.65 billion. Revenue grew to N405.5 billion from N373.2 billion.

The cement maker’s net finance costs rose to N21.3 billion from N14.4 billion.

Lafarge Africa is a building solutions company headquartered in Lagos and quoted on the Nigerian Stock Exchange. It is majorly controlled by the Holcim Group.

Unilever Nigeria

The tax expense of Unilever Nigeria rose by 53.6 percent to N5.13 billion in 2023 from N3.34 billion in 2022.

Profit for the period rose to N8.54 billion from N4.47 billion. Revenue grew to N97.44 billion from N64.64 billion.

Unilever Nigeria’s net finance income grew to N269.8 million from N194.9 million during the period.

Unilever is a publicly listed company with trading and manufacturing interests in the consumer goods market. In 2014, it was listed among the top 20 most valuable companies quoted on the Nigerian Stock Exchange. Unilever Nigeria PLC is a subsidiary of Unilever Overseas Holding B.V.

Dangote Cement

Dangote Cement recorded a 31.2 percent decline in its tax expense to N97.5 billion in 2023 from N141.7 billion in 2022.

Profit for the year surged to N455.6 billion from N382.3 billion. Revenue increased to N2.21 trillion from N1.62 trillion.

The cement maker’s finance cost grew to N310.96 billion from N130.37 billion during the period.

BUA Foods

BUA Foods also recorded a 41.5 percent decline in its tax expense to N9.29 billion in 2023 from N15.89 billion in 2022.

Net after-tax profit rose to N111.5 billion from N91.34 billion. Turnover grew to N728.5 billion from N418.3 billion.

The food maker’s net finance cost grew to N18.9 billion from N8.68 billion during the period.

BUA Foods is a food and fast-moving consumer goods business that processes, manufactures, produces and distributes food materials such as sugar, flour, pasta, rice, and edible oils as well as packaged foods. The company’s products currently include fortified and non-fortified sugar, flour for large and small-scale use, and pasta.

The firm expects to commence the processing, manufacturing, production and distribution of rice by 2022 and edible oils by 2024.