Nigeria Sees 249.2% Surge in Tax Payments from Local Companies in Q2 2024

Tax payments from local companies in Nigeria witnessed a staggering 249.2 percent increase in the second quarter (Q2) of 2024, according to the latest Company Income Tax (CIT) report released by the National Bureau of Statistics (NBS).

CIT, also known as corporate tax, is levied on the profits of companies operating within Nigeria. It is regulated by the Companies Income Tax Act (CITA) and enforced by the Federal Inland Revenue Service (FIRS). Under current regulations, companies with a turnover exceeding N100 million are taxed at 30 percent, while those with a turnover between N25 million and N100 million are taxed at 20 percent.

The NBS report revealed that local companies contributed N1.35 trillion in taxes to the federal government in Q2, up significantly from N386.49 billion in the previous quarter. Meanwhile, foreign companies operating in Nigeria paid N1.12 trillion in Q2, an 87.2 percent increase compared to N598.13 billion in Q1.

Sector Performance Breakdown

The agricultural sector led the surge in tax contributions, recording an impressive 474.50 percent growth compared to the previous quarter. “On a quarter-on-quarter basis, agriculture, forestry, and fishing recorded the highest growth rate with 474.50%, followed by financial and insurance activities and manufacturing with 429.76% and 414.15%, respectively,” the NBS report stated.

However, some sectors experienced a decline in CIT payments during the quarter. “Activities of households as employers, undifferentiated goods- and services-producing activities of households for own use, had the lowest growth rate with -30.22%, followed by activities of extraterritorial organizations and bodies with -15.67%,” the report noted.

Decade-Long Growth in Corporate Tax Revenue

An analysis by TheCable Index shows that Nigeria’s corporate tax revenue has experienced remarkable growth over the past decade, totaling N20.68 trillion from 2015 to 2024.

In 2015, corporate tax collections stood at N1.38 trillion but declined to N1.02 trillion in 2016. The trend reversed in 2017, with revenue climbing to N1.24 trillion, followed by N1.42 trillion in 2018, and N1.63 trillion in 2019. Collections dipped to N1.41 trillion in 2020 but rebounded to N1.69 trillion in 2021. The upward trajectory continued in 2022 with a collection of N2.83 trillion, rising further to N4.89 trillion in 2023.

For the first half of 2024, the total CIT collected stood at N3.45 trillion, indicating continued growth.

Local vs. Foreign Contributions Over the Decade

Over the past decade — excluding 2015 — local companies have consistently paid more CIT than foreign firms. In 2015, local companies paid N645.68 billion in taxes compared to N715.52 billion by foreign firms. From 2016 onwards, local firms have outpaced their foreign counterparts, with significant differences observed in 2021 and 2022 when local company payments crossed the N1 trillion mark.

In 2023, both local and foreign firms’ CIT contributions surpassed N2 trillion, with local firms paying N2.51 trillion and foreign firms contributing N2.39 trillion. For the first half of 2024, local companies have paid N1.74 trillion, while foreign firms have paid N1.72 trillion, indicating an upward trend for the remainder of the year.

This dramatic rise in CIT collections highlights the resilience of Nigeria’s corporate sector despite economic challenges, reflecting increased profitability and compliance among both local and foreign companies operating in the country.