September 12, 2022/FBNQuest
Our chart today, drawn from data from the National Bureau of Statistics (NBS), shows that the nation’s total collections from company income tax (CIT) increased by 29.5% q/q and 51% y/y to c.NGN714bn in Q2 ‘2022. Cumulatively, CIT collections increased by 46% y/y to NGN1.27trn in H1 ’22. The sums represent the federation’s gross CIT receipts, the majority of which go to the federal government. The NBS data series is compiled from data provided by the Federal Inland Revenue Service (FIRS).
Of the total amount collected, domestic CIT collections totalled NGN634bn or almost 89% of gross CIT receipts.
The manufacturing sector, which generated almost NGN175bn in CIT revenue, was the largest source of CIT revenue. It was up by 292% q/q and accounted for 28% of domestic CIT receipts and 24% of total CIT collections.
The information and communication sector was the second largest contributor to CIT revenue at almost NGN156bn, representing an increase of 431% q/q. Its share of domestic and total CIT collections was 25% and 22% respectively.
The financial services and mining & quarrying sectors with collections of NGN95bn and NGN50bn respectively, were the third and fourth most significant contributors to domestic CIT revenue, with shares of c.15% and 8% of domestic CIT collections. Collections for both sectors were up by 272% q/q and 106% q/q respectively.
The transportation sector ranked fifth in terms of CIT revenue with a total CIT take of NGN35bn, up 339% from q/q, and a share of almost 6% of domestic CIT receipts.
The rise in gross CIT receipts is a result of the FG’s increased efforts to increase tax income using technology, broadening the tax net to include more enterprises, and increasing the number of tax collection agents.
Despite this, Nigeria continues to have one of the lowest gross tax receipts in the world on a standardised basis. According to CBN data, total government non-oil revenue collected between January and May 2022 was around NGN3.1trn, which, when annualised, represents a non-oil revenue to (2021) GDP ratio of c.4.3%.
Given the issues around the oil industry’s revenue underperformance, increasing emphasis will be placed on improving tax collection efficiency and expanding the tax base.
