CIT Collection From Banks, Insurance Surge 175.59% In Q1
Company Income Tax (CIT) paid by banks and other financial institutions more than doubled in the first quarter of this year relative to the corresponding year of 2021, findings by InsideBusiness have shown.
According to the findings, CIT revenue collected from banks and Underwriters’ activities shot up to N25.51 billion in Q1 2022 compared to N9.26 billion in Q1 2021, representing a 175.59 per cent or N16.25 billion increase year-on-year.
The National Bureau of Statistics (NBS), recently, released the sectoral Q1 2022 CIT report. The report shows that while the CIT collection by all the sectors rose by 53 per cent to N532.48 billion from N347.81 billion in Q4 2021, the financial and insurance sector contributed 12.20 per cent to the overall collection.
It disclosed that banks and insurance activities collection amounted to N25.51 billion in income tax in Q1 2022. But, relative to Q4 2021, the figure moderated by 17.87 per cent or N5.55 billion from N31.06 billion.
CIT is a tax on the profits of registered companies and includes the tax on the profits of foreign companies carrying on any business in N National Bureau of Statistics igeria. It is currently charged at the rate of 30 per cent for companies having more than N100 million turnover and 20 per cent for companies with a turnover between N25 million and N100 million.
“The gross CIT revenue (N532.5bn) generated in Q1 2022 is a good start to the year, commendable in our view and a reminder that CIT collection is a major part of non-oil revenue for the government, which can grow if efforts are harnessed to resolve some of the age-long issues affecting the business environment and dragging profitability,” analysts at CSL Stockbrokers stated in their report.
Meanwhile, the unaudited Q1 2022 financial statements of five Tier-1 banks show that their income tax expenses rose by 21.69 per cent to N35.67 billion in Q1 2022 when compared to N29.31 billion the banks paid in Q1 2021.
The banks are FBN Holdings, United Bank for Africa, Guaranty Trust Holding Company, Access Holdings, and Zenith Bank.
The report shows that, in the period under review, GTCO’s income tax expense rose highest by 36.14 per cent to N11.08 billion in Q1 2022 from N8.14 billion in Q1 2021. Zenith bank followed, increasing from N7.96 billion in Q1 2021 to N9.79 billion and representing a 22.996 per cent rise.
While Access bank recorded a menial 3.09 per cent rise to N7.74 billion from N7.50 billion in income tax expenses, FBN Holdings’ rose by 24.08 per cent to N4.08 billion from N3.29 billion, and UBA recorded a 23.17 per cent rise in income tax expense from N2.43 billion to N2.988 billion.
The components of the income tax expenses, according to a detailed explanation of the banks, were made up of corporate tax, information and technology tax, education tax, National Agency for Science and Engineering (NASENI), Police trust fund levy and National Fiscal Stabilization Levy & Financial Sector Recovery.
Regarded as the fulcrum of the nation’s finance and economic system and referred to as the “too big to fail” banks because of their importance to the Nigerian economy, the tier-1 banks are said to control more than three-quarters of the banking assets and are seen as representatives of the entire banking system.
However, there have been some cases of tax evasion or avoidance, even though the banking institutions have continuously posted stellar growth and performance.
In 2020, a report by the Tax Appeal Tribunal, Lagos Zone, compelled Ecobank Nigeria Limited to pay at least N1.6 billion to the Federal Inland Revenue Service (FIRS) as its company income tax for 2016.
The tribunal had declared illegal, the decision of Ecobank to pay N5.5 billion as dividends to its shareholders in a year the bank claimed it made no taxable profit and rather declared losses from its banking operation.
Currently, the Nigerian National Assembly is deliberating on the National Inspector General for Tax Crimes Commission, 2022 Bill, which as of 24 March 2022, had passed the second reading and has been referred to the Committee on Finance for review and recommendations.
The bill seeks to create a commission which will perform certain activities, some of which already seem to be under the purview of the Federal Inland Revenue Service (FIRS).
These include addressing revenue leakages emanating from non-payment and underpayment of taxes; tackling irregularities in the assessment, reporting and remittances of taxes; preventing and combating tax-related crimes; plugging all leakages in the tax administration system, and ensuring the protection of taxpayers’ rights.
Comments are closed.