As expected, the recent Company Income Tax (CIT) report published by the National Bureau of Statistics (NBS) revealed an increase in the amount of revenue generated in Nigeria through CIT in Q1-2022.
According to the data, a total of N532.5 billion was generated in Q1-2022, a 53.1 per cent q/q increase from the N347.8 billion generated in Q4-2021 and a 35.6 per cent y/y increase from N392.7 billion generated in Q1-2021.
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 Jan-2022.
In addition, it reflects sustained post-pandemic recovery in economic activities underpinned by stronger consumer demand.
Analyzing the data further, foreign CIT payments amounted to N323.4 billion and local payments amounted to N209.1 billion making up 60.7 per cent and 39.3 per cent respectively, of total CIT numbers.
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.
The surge in Foreign CIT collections was broadly down to the extension of coverage of Non-Resident Companies (NRC) with significant economic presence in Nigeria.
On a quarter-on-quarter basis, most sub-categories (within the local collection segment) recorded a decrease in CIT reported, with amounts generated by Activities of Households as employers and Accommodation & food service activities declining the most by 79.9 per cent and 51.1 per cent respectively.
Surprisingly, Construction and Education numbers increased by 39.0 per cent q/q and 39.8 per cent q/q respectively, with Activities from extraterritorial organizations and bodies increasing the most by 60.6 per cent q/q.
Looking forward, we remain bullish on CIT collections in FY-2022. The NRA 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 sustain the impressive growth it started the year with.