A YoY Rise in CIT Collection; Increases by 117% in Q4 2022

Today’s chart is drawn from data on company income tax (CIT) produced by the National Bureau of Statistics (NBS) in conjunction with the Federal Inland Revenue Service (FIRS). The data shows that total CIT collections for Q4 ’22 declined by -7% q/q to c.NGN754bn. However, on a y/y basis, the total sum generated from CIT collections increased by 117% y/y. On a cumulative basis, the total revenue from CIT for 2022 increased by 68% y/y to NGN2.8trn. The sums represent the federation's gross CIT receipts, majority of which go to the federal government.

Foreign CIT payments accounted for most of the total collections during the quarter. It accounted for nearly NGN400bn or 53% of total CIT collections.

Domestic CIT collections increased by 37% y/y to NGN354bn, or c.47% of gross receipts. However, in line with the pattern observed in the prior year, it decreased by -27% q/q.

In terms of composition, the manufacturing sector was the most significant contributor to domestic CIT revenues, accounting for NGN110bn, or 31% of domestic CIT receipts, and almost 15% of total receipts (including foreign CIT collections).

The financial and insurance sector was the second largest contributor to CIT revenue, generating around NGN46bn in revenue and accounting for 13.0% and 6.1% of domestic and gross CIT receipts respectively.

Information and communications rounds up the list of the top three CIT revenue generating sectors with total collections of NGN45bn, or 12.8% and 6.0% of domestic and total CIT revenue.

Although the increase in the tax take is commendable, thanks to improvements in tax administration and collection efficiency, nevertheless, Nigeria’s tax revenue-to-GDP is low even when compared with sub-Saharan African peers.

Nigeria’s non-oil revenue which stands at less than 5% of GDP compares less favourably with comparable tax revenue-to-GDP ratios for South Africa, Kenya, and Ghana with c. 23%, 14%, and 11%, respectively.

Going forward, we expect the incoming administration to grow non-oil-related taxes by further broadening the tax base and improving on collection efficiency.