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Q2’21: FG nets N472.07bn from company income tax

Amount represents 20% increase Q-o-Q
Professional services contribute highest quota

Professional service providers closely followed by manufacturing sector paid the highest revenue as Company income Tax (CIT) to the tune of N130.09 billion and N87.27bn into Federal Government’s coffers during the second quarter of the current year. The government realised a total of N472.07 billion from CIT during the period. CIT is deductible tax usually 30 per cent for large companies (i.e. companies with gross turnover greater than N100 million), assessed on a preceding year basis (i.e. tax is charged on prof-its for the accounting year ending in the year preceding assessment).

The country has been experiencing a dip in CIT since the outbreak of COVID-19 on the backdrop of shut down business activities to minimise impact posed by the pandemic. According to the Federal Inland Revenue Service (FIRS) revenue collected in Q1’20 was N95.7 billion from the corresponding figure of N40.6 billion recorded in Q1’19. A National Bureau of Statistics (NBS) CIT data on sectoral contribution (Q2’21) obtained on Wednesday reflected that the sum of N472.07 billion was generated as CIT as against N392.64 billion generated in Q1’21 and N402.03 billion generated in Q2’20, representing 20.23 per cent increase in quarter-on-quarter and 17.42 per cent increase Yearon- Year.

The NBS data indicates that professional services with revenue generation of N130.09 billion recorded the highest pay out closely followed by manufacturing sector, which generated N87.27 billion. Similarly, banks and other financial institutions generated N60.01 billion while textile and garment industry generated the least and closely followed by automobiles with N27.23 million, N62.15 million and N64.30 million respectively.

Further analysis of NBS’ sectoral data showed agricultural and plantations paid N2. 9 billion in Q2’21 as against N924.4 million Q1’21, reflecting 223.45 per cent Q-on-Q and 152.08 per cent Y-o-Y. Automobiles paid N62.1 billion in the quarter under review compared to Q1 figure of N73.5 billion, representing 23.86 per cent y-o-y and 15.53 per cent Q-o-Q. For banks and financial institutions, the sum of N60.01 billion generated was higher than N9.2 billion CIT paid in Q1’21. Building and Construction pooled N5 billion in Q2 as against N 2.9 billion realised in the previous quarter.

Chemicals, paints and allied industries paid CIT of N310. 4 million as against previous quarter payment of N354.3 million, which indicates 12.40 percent Q-o- Q growth and 41.08 percent Y-o-Y growth rate. Commercial and trading in first the quarter of 2021 paid CIT of N23.6 billion as against last quarter amount of N13.4 billion. In the same vein, conglomerates paid N1.4 billion as against previous quarter of N568.8 million. Also federal ministries and parastatals collectively paid a sum of N4.9 billion compared to first quarter figure of N6.3 billion.

The gas sector also paid N8.3 billion asbagainst Q1 figure of N805 million, hotels and catering paid N2. 8 billion as against N789 million in Q1’21, local government councils paid N182.1 million as against previous quarter payment of N221.6 million, mining paid N12.4 billion as against first quarter payment of N34.4 million. Of the total amount generated in Q2’21, N412.74 billion was generated locally while N51.61 billion was generated as foreign payment. The balance of N2.72 billion was generated as CIT from other payments. FIRS had set a revenue target of N5.9 trillion for 2021.

The agency’s Executive Chairman, Mohammed Nami, while appearing in May before the House of Representatives Committee on Finance to defend the service’s 2021 budget, had said the service generated N4.9 trillion in 2020 despite the nationwide lockdown occasioned by COVID-19. The tax boss said N289 billion of the proposed budget was earmarked for the operations of the service in 2021.

 

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