Tuesday, February 02, 2021 / 11:30 AM / by CSL
Research / Header Image Credit: iStock
Recent data on collection of Company Income Taxes (CIT) published by the National Bureau of Statistics (NBS) for the last quarter (Q4) of 2020, showed that total CIT collections for Q4 2020 was N295.7bn, down 18.31% y/y compared with N362.0bn collected in Q4 2019 and also lags 28.9% on a q/q basis compared to Q3 2020's N416.0bn. In 2020 overall, CIT collections amounted to N1.4tn, a 13.4% decline from N1.6tn recorded in 2019. This clearly reflects year long pressures from the pandemic as well as slow economic activities.
Across sectors, collections deteriorated in some sectors in Q4 2020 with the biggest laggards being Transport & Haulage Services (down 56.7% y/y), Federal Ministries & Parastatals (down 45.9% y/y) and Banks & Financial Institutions (down 43.4% y/y) while other sectors improved in the review period with the biggest gains come from Petro-chemical & Petroleum Refineries (up 284.5% y/y), Conglomerates (up 129.2% y/y), Mining (up 121.9% y/y).
CIT collections form a major part of non-oil revenue for the Federal Government and a decrease in collections further contributes to the government's fiscal crisis in light of growing budget expenditure and poor revenue generation. The Finance Act 2020 made some adjustments to CIT. The newly Finance Act 2020 signed into law states that the minimum tax rate reviewed to 0.25% of gr0ss turnover serves an incentive to reduce the impact of Covid-19 on businesses