Sectors Paying the Most Company Income Tax in Q1: A Comprehensive Analysis

In the first quarter of this year, the Federal Government’s revenue from Company Income Tax (CIT) experienced a decline of 12 percent, as indicated by recent data from the National Bureau of Statistics (NBS). The revenue dropped to N984.61 billion in Q1 from N1.13 trillion in Q4 of the previous year. However, on a year-on-year basis, CIT revenue saw a significant increase of 109 percent, rising from N469 billion in Q1 2023.

Local payments contributed N386.49 billion, while Foreign CIT Payments amounted to N598.13 billion in Q1 2024. The following sectors were the top contributors to CIT in Q1:

Top Contributing Sectors

  • Mining and Quarrying

The Mining and Quarrying sector emerged as the largest contributor, with CIT payments totaling N80 billion. This sector’s contribution increased by 21.3 percent from N66.7 billion in the previous quarter.

  • Financial and Insurance Activities

This sector followed closely, contributing N72.4 billion, marking a 2.56 percent increase from N70.5 billion in Q4.

  • Information and Communication

The Information and Communication sector’s contribution stood at N48.5 billion, although this represented a 6.88 percent decrease compared to the N52.1 billion paid in the previous quarter.

  • Manufacturing

The Manufacturing sector saw its CIT payments rise to N43.1 billion. However, this was a significant 70.4 percent drop from the N145.1 billion paid in Q4. Abiodun Kayode-Alli, a tax senior manager at PwC, attributed this to the challenging business environment and high production costs. He also noted that Q1 collections are typically lower because many companies complete their filings and payments by June 30.

  • Public Administration and Defence, Compulsory Social Security

This sector’s contributions increased by 24.5 percent, reaching N42.6 billion in Q1 from N34.2 billion in the previous quarter.

  • Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles

This sector contributed N16.1 billion, a 39.7 percent decrease from the N26.7 billion paid in Q4.

  • Transportation and Storage

The Transportation and Storage sector’s CIT payments rose to N12.9 billion, despite a 45.5 percent decrease from N23.7 billion in the previous quarter.

  • Other Service Activities

This sector, which includes a broad range of services such as personal and repair services, contributed N11.4 billion, a 52.5 percent drop from N24.04 billion in Q4.

  • Professional, Scientific, and Technical Activities

CIT contributions from this sector totaled N11.2 billion, a 14.5 percent decline from N13.1 billion in the previous quarter.

  • Construction

The Construction sector contributed N10.6 billion, representing a 32.9 percent decrease from N15.8 billion in Q4.

Highest Growth Rates

In terms of growth rate, the following sectors led the way:

  1. Activities of Households as Employers, Undifferentiated Goods- and Services-Producing Activities of Households for Own Use: 330.42 percent growth.
  2. Administrative and Support Service Activities: 33.18 percent growth.
  3. Public Administration and Defence, Compulsory Social Security: 24.6 percent growth.

Company Income Tax Rates

CIT, also known as corporate tax, is imposed on a company’s income. The CIT rates are structured as follows:

  • 0 percent for companies with a gross turnover of N25 million or less.
  • 20 percent for companies with a gross turnover greater than N25 million and less than N100 million.
  • 30 percent for large companies with a gross turnover above N100 million.

This analysis underscores the contributions and trends in various sectors’ CIT payments, reflecting the broader economic conditions and sector-specific dynamics influencing these figures.

 

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