- Gets boost from growth in tax collection
Nigeria’s tax collection strategy continued to pay off in recent times with a joint report by the National Bureau of Statistics (NBS) and Federal Inland Revenue Service (FIRS) in the first half of the year showing a ramp up in quarterly numbers. For instance, a 17.42 percent year on year increase in total company income tax (CIT) collected in the second quarter of 2021 saw the country post N472.07 billion in CIT as against the N402.03 billion collected in the same quarter of 2020.
The report also showed a 20.23 percent quarter on quarter increase from N392.65 billion reported in the previous quarter.
A look into the report revealed that in the first six months of 2021, total CIT rose 24 percent to N864.72 billion from N697.81 billion recorded for the same period last year. The increase in the revenue from company taxes is said to have been driven by a supportive double digit growth in company income tax (CIT) collection accompanied by the return of growth trajectory of some very important sectors of the Nigerian economy.
A further look at sectoral distributions of the revenue collected show that ‘Professional Services’ including telecoms, generated the highest amount of CIT with N130.09 billion in the second quarter of 2021, rising by over 600 percent from N18.2 billion reported in the first quarter; and it was followed by ‘Other Manufacturing’, which generated N87.27 billion. It could be recalled that within Nigeria’s manufacturing sector, the foods, beverages and tobacco segment posted the fastest GDP growth rate of 7.1 percent year on year in the first quarter of 2021. This supported the growth in the sector also.
Elsewhere, the banks and financial institutions generated N60.01 billion, according to the NBS report, while the textile and garment industry generated the least, behind the likes of Automobiles and Assemblies and Pioneering with N27.23 million, N62.15 million and N64.30 million generated, respectively.
Meanwhile, out of the total N472.07 billion that was generated during the second three months of 2021, a total of N412.74 billion was locally generated as CIT, while N51.61 billion was generated as foreign CIT payment. The balance of N2.72 billion was generated as CIT from other payment channels, which include income tax through other electronic channels.
Although the total CIT reported during the second quarter is higher than what was reported during the first three months of 2021, the latter figure is regarded as the weakest in historical trends.
