Q4 CIT down 26.4% q/q from N472.52bn in Q3
Inefficient collection system responsible
Total company income tax (CIT) generated from firms domiciled in Nigeria plummeted 26.4 percent on a quarter on quarter basis to N347.81 billion at the end of the fourth quarter of 2021 from N472.52 billion in the third quarter of 2021, according to a recent CIT report published by the National Bureau of Statistics (NBS).
The NBS CIT report, with data provided by FIRS, shows the decrease could be attributed to plans put in place for firms to recover their income levels to the pre-covid-19 era.
With all ministries, departments and agencies of the federal government gunning for increased revenues into government coffers, it is without a doubt that Nigeria’s tax collection has suffered setbacks considering the current state of the nation’s economy. The challenges, over the years, have spanned from ineffective tax collection channels, the cumbersome process required for the filing of tax or the problem of double taxes experienced by several businesses among other loopholes, which can easily be pointed out in Nigeria’s tax system.
According to the NBS report, the total of N347.81 billion collected in taxes from companies comprise N258.85 billion from local tax payments in the country, while the remaining N88.96 billion was contributed by foreign payments of tax. Thus, on a year-on-year basis, CIT collections in Q4 2021 increased by 17.61 percent as against Q4 2020.
During the quarter under review, positive growths were recorded in accommodation and food service activities which were up by 116.01 percent to N2.19 billion; activities of extraterritorial organisations and bodies up by 128.92 percent to N447.01 million; activities of households as employers, undifferentiated goods and services-producing activities of households for own use up by 563.56 percent to N189.5 billion.
Also, the data collected by the FIRS and published by the Abuja-based statistics office revealed that companies in the construction sector recorded a 33.32 percent quarter on quarter increase in taxes to N5.38 billion; electricity, gas, steam, and air conditioning supply reported 84.68 percent growth to N5.17 billion; human health and social work activities had 31.47 percent to N2.83 billion and other service activities’ tax grew 37.28 percent to N18.29 billion.
Elsewhere, the professional, scientific and technical activities reported significant growth of 51.47 percent to N5.61 billion; public administration and defence, compulsory social security also rose 29.46 percent to N23.66 billion; real estate activities surged 17.99 percent to N1.7 billion; transportation and storage (2.04%) paid N10.9 billion in taxes; water supply, sewerage, waste management and remediation activities (26.08%) paid N328.6 million; and wholesale and retail trade, repair of motor vehicles and motorcycles (13.91%) coughed N10.7 billion in taxes to the federal government.
On the other hand, there was a decrease recorded in tax collection from administrative and support service activities (-72.15%); agriculture, forestry and fishing (-34.52%); arts, entertainment and recreation (-25.31%); education (-1.61%); financial and insurance activities (-5.52%); information and communication (-4.33%); manufacturing (-23.21%); and mining and quarrying (-7.56%) during the review period.
Looking into the sectoral contributions, the report showed that the largest contributors to the company income tax (CIT) during the quarter were information and communication with N51.05 billion, trailed by the manufacturing sector with N45.09 billion, and then the financial and insurance sectors jointly contributed N31.06 billion.
On the other side of the table, the report shows that activities of households as employers, undifferentiated goods- and services-producing activities of households for own use contributed N189.45 million; followed by water supply, sewerage, waste management and remediation activities with N328.58 million, and activities of extraterritorial organisations and bodies amassing N447.01 million respectively.
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