The Federal Government has generated N11.5 trillion from taxes paid by business organizations during the administration of Major General Muhammadu Buhari (retd). Findings from The indicate that data sourced from Company Income Tax (CIT) reports published by the National Bureau of Statistics between 2015 and 2022 reveal that the CIT collected by the Federal Inland Revenue Service was N1.3 trillion when the President took office in 2015. However, this figure dipped by 26 percent to N1 trillion in 2016, coinciding with the country’s economic recession caused by a significant drop in oil prices. From 2017 to 2020, CIT showed a steady increase, with the government generating a total of N5.3 trillion during this period.
Companies Income Tax is levied on the profits of incorporated entities in Nigeria, including non-resident companies conducting business in the country. This tax applies to limited liability companies, including public limited liability companies, and is commonly referred to as corporate tax. The CIT rate is set at 30 percent for large companies, defined as those with a gross turnover exceeding NGN 100 million. The assessment is based on profits from the accounting year ending in the year prior to the assessment. In 2021, the Federal Government earned N1.6 trillion from corporate tax, and in the first three quarters of the previous year, it achieved a record revenue of N2 trillion from CIT.
An analysis of the 2022 Company Income Tax records indicated a significant increase in taxes paid by companies across various sectors. For instance, tax contributions from firms in the information and communication sector surged by 158.51 percent, rising from N51.05 billion in the third quarter of 2021 to N131.97 billion in the same period in 2022. Additionally, manufacturers emerged as the highest taxpayers during this timeframe, as the Federal Government expanded the number of taxes collectable by the Federal Inland Revenue Service from 39 to 61 items. New taxes introduced include the national information technology development levy, economic development levy, environmental fees, inter-state road taxes, and various other charges.
Furthermore, checks by The revealed that CIT paid by manufacturers increased by 52.3 percent, from N91.2 billion in the third quarter of 2021 to N138.9 billion in the corresponding quarter of 2022. In an interview with The, Michael Olawale-Cole, President of the Lagos Chamber of Commerce and Industry, expressed concerns that the productive sector is being overburdened by taxes due to the government’s failure to broaden the tax base and capture more taxpayers. He advised the government to explore ways to protect its revenue sources rather than resorting to aggressive taxation during revenue shortfalls. Olawale-Cole emphasized the need for the government to identify and include more taxpayers, noting that many individuals and businesses generating income are not currently contributing to the tax system.
Industry experts in the ICT sector, one of the highest contributors to CIT, have also raised alarms about the burden of multiple taxes. A report titled “Taxing Nigeria’s Subnational Economies to Oblivion” by SBM Intelligence highlighted that the industry has faced over-taxation due to its sustained growth over the past 20 years. The report stated that telecommunications companies at the federal level are expected to pay various taxes, including Companies Income Tax, Capital Gains Tax, Withholding Taxes, and several others. Additionally, sector-specific taxes and levies, such as the Annual Operating Levy to the Nigerian Communications Commission and contributions to various funds, further complicate the tax landscape for the industry.
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