New Telegraph

Banks, financial institutions pay N751.73bn taxes in six years

Banks and financial institutions sector generated a total sum of N751.73 billion as Company Income Tax (CIT) between 2015 and 2020, findings by New Telegraph show.

 

According to the “Company Income Tax By Sector (Q4’2020)” report released by the National Bureau of Statistics (NBS) a few days ago, the banks and financial institutions sector generated the sum of N96.4 billion as CIT in 2020, which is the lowest amount generated in the last six years.

 

With the report showing that the banks and financial institutions sector generated N110.93billion as CIT in 2015, N123.91 billion in 2016, N137.72 billion in 2017, N140.08 billion in 2018 and N142.7 billion in 2019, it means that the sector generated a total of N751.73 billion between 2015 and 2020.

 

Also, New Telegraph’s analysis of the NBS data indicates that, in the last six years, it was only in 2020 that the CIT generated by the sector headed south.

 

For instance, a review of 9M 2020 financial statements of the country’s five Tier 1 lenders – Zenith Bank, Guaranty Trust Bank (GTBank), Access Bank, FBN Holdings and United Bank for Africa (UBA) – shows that the total income tax of N79.56 billion that they paid during the period was N5.76 billion less than the N85.31 billion that they reported for the corresponding period of 2019.

 

Specifically, Zenith Bank paid income tax of N17.97 billion in the nine first nine months of last year compared with N25.46 billion in the same period of 2019. Similarly, at N13.24 billion, UBA’s 9M 2020 income tax expenses was 20.26 per cent less than the N16.61 billion that the first tier lender paid as income tax in the same period of 2019.

 

However, the N25.07 billion that GTB paid as income tax during the period was 5.94 per cent more than the N23.66 billion the lender paid as income tax in the corresponding period of 2019.

 

Access Bank and FBN Holdings also paid slightly higher amounts of income tax in the first nine months of 2020 compared with what they paid in the corresponding period of the previous year.

 

Analysts attribute the decline in CIT generated by the sector last year to the impact of the coronavirus (COVID-19) crisis, which plunged the global economy into its worst recession since the Great Depression.

 

In fact, although the NBS report states that key sectors, such as Professional Services, including Telecoms (which benefitted from the lockdown measures introduced by government to help contain the spread of the virus), other manufacturing and commercial and trading, recorded an increase in the amount of CIT they generated last year compared with the preceding year’s, a breakdown of the numbers shows that government revenue from CIT in 2020 fell by 5.92 per cent to N1.41 trillion from N1.50 trillion recorded in 2019.

 

Under Nigerian laws, the CIT rate is 30 per cent for large companies (companies with annual turnover of N100 million and above), assessed on a preceding year basis (i.e. tax is charged on profits for the accounting year ending in the year preceding assessment).

 

In the last few years, the Federal Government, as part of its efforts aimed, at ensuring that the fate of the nation’s economy is no longer primarily determined by developments in the international oil market, has, through the Federal Inland Revenue Service (FIRS), introduced several initiatives to improve tax revenue collection.

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