Despite COVID-19, Nigeria’s Company Income Tax increased in 3rd quarter 2020 – NBS

Although many Nigerian firms struggled to cope with the impact of COVID-19 on their operations, taxes paid to the government by companies increased in the third quarter of 2020.

Nigeria generated N416.01 billion from Company Income Tax (CIT) in the third quarter of 2020, the National Bureau of Statistics (NBS) has said.

This, the agency noted, is an increase of 3.4 per cent from the N402.03 billion generated in the preceding quarter.

This takes the total CIT generated in the first three quarters of this year to N1.11 trillion.

In the whole of 2019, N1.63 trillion was generated as CIT; in 2018, it was N1.42 trillion; in 2017, it was N1.25 trillion.

The 2020 third quarter earnings, nonetheless, is a decrease of about N100 billion (20 per cent) when compared to the N520.89 billion generated in the third quarter of 2019.

The 2019 figure was higher than that of the third quarter of 2018, N362.7 billion, which was higher than the 2017 third quarter figure of N338.9 billion.

In the report published Thursday, NBS further gave a breakdown of the performance by different sectors and agencies on company income tax, with the ICT sector ranking top.

The report showed that professional services, which includes telecoms, generated the highest amount of CIT with N55.52 billion, closely followed by manufacturing, which generated N42.03 billion.

Meanwhile, the ICT sector contributed an increase and the highest amount to GDP in the second quarter amidst economic slowdown.

This, analysts believe, is as a result of high consumer demand for telecommunication services amidst nationwide lockdown due to COVID-19.

But as the movement restrictions were lifted, the sector’s contribution slowed in the third quarter after the nation’s economy plunged into its worst recession in about 40 years.

Other sectors

Banks and financial institutions generated N24.05 billion while commercial and trading paid N22 billion as company tax, the report showed.

Meanwhile, the mining sector generated, in tax, the least with N120 million, while textile and the garment industry paid the second least tax with N167 million.

Of the total amount generated in this year’s third quarter, N244.70 billion was generated as CIT locally while N70.34 billion was generated as foreign CIT payment.

“The balance of N100.97bn was generated as CIT from other payments.”

On Saturday, NBS said the Nigerian economy had contracted a negative growth of 3.62 per cent in the third quarter of 2020, slipping into its second recession in five years.

The recession, analysts said, is the worst economic decline in almost four decades.

But, the Nigerian government has, however, dismissed fear and expressed optimism that it would reverse the declining trend and restore the economy in the path of sustainable growth.

The Minister of Finance, Zainab Ahmed, on Monday said, “For the three quarters combined for 2020, aggregate GDP decline is now 2.60 percent, this is a clear signal that the Nigerian economy is improving, that there are economic activities that are being better.”

She said the negative growth of 3.62 per cent in the third quarter of 2020 is much better than the -6.01 per cent earlier forecast by the NBS.

“Let me remind you that before the impact of COVID-19, the Nigerian economy was experiencing sustained growth, which has been improving quarter by quarter for three years until the second quarter of 2020 when the impact of the Covid-19 was felt.

“Despite the recession, Nigeria has outperformed many economies in terms of economic growth,” she said.

Many Nigerian firms have struggled to cope with the economic situation with some slashing workers’ salaries and others laying off staff,