Nigeria generated a total of N714.40 billion from Company Income Tax (CIT) in the second quarter of 2022, according to data from the National Bureau of Statistics (NBS). This is Nigeria’s highest CIT revenue since 2018 and reflects a growth rate of 29.53% compared to the N551.53 billion earned in Q1 2022.
CIT is a tax levied on the profits of domestic and foreign companies doing business in Nigeria. Currently, in Nigeria, the CIT stands at a rate of 20% for businesses with a turnover of N25 million or less and 30% for those with N100 million or more in annual revenue.
In the quarter under review, the total revenue Nigeria raked in from CIT stood at N714.40 billion, an increase from the previous quarter, as Dataphyte predicted.
Of the 3 sources — local payment, foreign payment, and other payments — that makeup CIT revenue, local payment accounted for 88.75% of the total revenue earned in Q2, while foreign payments made up only 11.25%. “Other payments,” on the other hand, had zero contribution in the quarter under review.
Compared to Q1, revenue from local payments rose by 203.17%, while foreign payments decreased by 76.52%.
A breakdown of the collections from local payments shows that manufacturing, information and communication, and financial and insurance activities contributed the highest shares based on sectoral returns. Together, these 3 sectors accounted for 67.10% of all local payments revenue in the second quarter.
On the other hand, activities of households as employers, activities of extraterritorial organisations and bodies, and water supply recorded the lowest contribution. Combined, the contribution from the 3 sectors was only N1.18 billion, representing 0.19% of the total revenue from local payments.
Further sector analysis reveals that, with the exception of 4 sectors (activities of extraterritorial organisations and bodies, activities of households as employers, administrative and support service activities, and education), all sectors had positive growth in Q2 of 2022. These four aforementioned industries were the only ones that had positive growth rates in Q1, excluding the activities of households as employers.
Overall, the 29.53% growth rate recorded in Q2 this year could suggest the recovery of businesses in Nigeria from the effect of the coronavirus, which impacted their productivity. The sharp decline in revenue from foreign payments needs to be examined, especially as the country hopes to increase revenue from the non-oil sector.