Finance Act, Economy Recoveries Increased Company Income Tax By 35.6%
Revenue generated from Company Income Tax (CIT) has continued an uptrend, rising by 35.6 per cent Year-on-Year (Y/Y) to N532.48 billion in the first quarter ended March 2022 (Q1’22) from N392.7 billion in the corresponding period of 2021, Q1’21.
The increase follows the renewed drive by the federal government to bolster its revenue through increased collections from non-oil sources on the back of the new Finance Act 2021 which came into effect in January 2022, as well as significant post-Covid economic recovery.
Breakdown of data from the National Bureau of Statistics (NBS) also showed the figure rose by 53.1 per cent Quarter-on-Quarter (Q/Q) from the N347.8 billion generated in Q4’2021.
Analysis of the Q1’22 data showed that foreign CIT payments amounted to N323.4 billion, while the local payments amounted to N209.1 billion, representing 60.7 per cent and 39.3 per cent respectively, of the total CIT numbers.
Further details show that foreign CIT payments recorded a 263.5 per cent Q/Q increase and a 175.3 per cent Y/Y increase while local payments declined by 19.2 per cent Q/Q but increased 37.3 per cent Y/Y.
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Meanwhile, financial experts have projected further rise in CIT collections on the back of recovery in the economy, while attributing the surge in Q1’22 CIT to extension of coverage of Non-Resident Companies (NRC) with significant economic presence in Nigeria.
According to analysts at United Capital Plc, the growth in company tax collected appears to show fruits of the recently amended Company Income Tax law as part of the 2021 Finance Act which became effective January 2022. In addition, it reflects sustained post-pandemic recovery in economic activities underpinned by stronger consumer demand.”
Going forward, they said: “We remain bullish on CIT collections in FY-2022. The NRC coverage expansion continues to drive strong collections, softening the impact of weaker local CIT collections. In addition, we anticipate local collections will improve as the economy sustains the impressive growth it started the year with.”