The Federal Inland Revenue Service (FIRS) on behalf of the federal government of Nigeria generated a sum of N532.48 billion from Company Income Tax (CIT) in the first quarter of 2022, an increase of 35.6% compared to Q1 2021.
This is contained in the recently released Company Income Tax report, by the National Bureau of Statistics (NBS).
Specifically, company income tax revenue increased by 35.6% in Q1 2022 compared to N392.65 billion generated in the corresponding period of 2021. On a quarter-on-quarter comparison, company income tax revenue increased by 53.1% compared to N347.81 billion recorded in Q4 2021.
A breakdown of the report shows that Nigeria generated a total of N209.13 billion from local companies, which is 19.2% lower than the N259.85 billion generated in the previous quarter. However, it is 37.3% higher than the N152.33 billion recorded in Q1 2021.
Also, foreign CIT payment for the period under review was N323.35 billion, 263.5% and 75.3% higher than N88.96 billion and N184.47 billion recorded in Q4 and Q1 2021 respectively, while the FIRS recorded no revenue from other payments.
Top sectors with highest CIT remittance
- The manufacturing sector topped the list of sectors with the highest CIT remittance in Q1 2022 with N44.56 billion, followed by the ICT sector with N29.35 billion.
- The financial and insurance sector remitted a sum of N25.51 billion as company income tax.
- Fourth on the list was the mining and quarrying sector with N24.38 billion, public administration and defence, compulsory social security remitted N21.66 billion, while other service sector remitted N14.92 billion.
- Others on the list include wholesale and retail trade (N8.29 billion), transportation and storage (N7.96 billion), construction (N7.48 billion), and education (N5.24 billion).
Nigeria’s dwindling revenue amid high spending
- According to the report, Nigeria’s CIT revenue rose to its highest level in the period under review. The significant improvement in non-oil revenue has become imperative for the Nigerian economy given the recent decline in crude oil earnings and rising government expenditure.
- Recall, that the Organization of the Petroleum Exporting Countries (OPEC) reported a 1.53% decline in Nigeria’s crude oil production in April 2022, falling from an average of 1.238 million barrels per day (mbpd) to 1.219mbpd.
- On the back of falling revenue, Nigeria’s expenditure has also grown significantly. According to a recent analysis by Nairametrics, the federal government spent 96% of its revenue on debt servicing in 2021, which was its worst on record.
- In the same vein, Nigeria’s fiscal deficit also rose to its highest level at N7.3 trillion in 2021 as federal expenditure skyrocketed to N11.7 trillion, while revenue remained at N4.39 trillion.
What happened in 2021
Nigeria’s company income tax rose significantly by 19.6% in 2021 to N1.69 trillion, largely due to a base period, as revenue dropped sharply in 2020 to N1.41 trillion as a result of the covid-19 pandemic, which caused a halt in most economic activities in the better part of the year.
However, there have been increased spending in the economy after various intervention and stimulus packages especially by the Central Bank helped in quickening the recovery of consumer spending in 2021, with more expansion expected in 2022.
A look at the financial statements of the top 28 companies operating in the ICT, manufacturing, oil and gas, and agricultural sectors listed on the Nigerian stock market showed that their revenue increased by 33.2% to N2.33 trillion in Q1 2022 from N1.74 trillion recorded in the corresponding period of 2021.
According to the analysis, the likes of MTN, Dangote Cement, and Flour Mills recorded the highest revenue during the period.