September 15, 2022/United Capital Report
The National Bureau of Statistics (NBS) recently published its Company Income Tax (CIT) report for Q2-2022. The report shows that CIT printed at N714.4bn in the period under review, a 29.5% q/q increase and a 51.3% increase from Q2-2021.
A breakdown of the composition of corporate income tax showed improved tax receipts from Q1-2022. Local payments constituted the bulk of receipts, accounting for 88.7% of the total figure. As reported, activities related to Manufacturing made the largest contribution of N174.7bn, a 16.4% q/q increase and 24.5% of the total. This is closely followed by the ICT sub-sectors’ N155.7bn contribution, a 16.5% q/q increase, and the Financial and Insurance sub-sector’s N95.0bn contribution and 8.7% q/q increase. Also, quarterly tax payments declined from 5 of the 21 sub-sectors reported, and only six sub-sectors recorded quarterly growth greater than 1.0%.
Going forward, we expect CIT collections will continue to remain strong. At 4.1%, Nigeria has one of the lowest tax-to-GDP ratios in Africa. High growth sectors such as the Transportation and Storage sector, whose output grew 51.7% q/q in Q2-2022, will be a prime goal. . According to the amended framework of the 2022-24 MTEF, CIT collections had performed strongly at 105% of the Pro-rata budget target in 2022. Nonetheless, regardless of the strong tax revenue performance in H1-2022, we expect the underperformance of non-oil revenue (Oil revenue) which still lies below 50%, to increase debt financing for the FGN.
