Tax income from businesses and consumers increased by 96.11 percent to N2.31 trillion in the second quarter of 2023, representing a significant increase from the first quarter to the second quarter of the year.
According to the National Bureau of Statistics, businesses and consumers collectively paid N1.18 trillion in taxes during the first quarter of 2023. The Company Income Tax, which increased by 226.40 percent quarter-on-quarter to N1.53tn from N469.01bn in the first quarter of 2023, was the major contributor to the huge increase in taxes generated in the second quarter.
According to the National Bureau of Statistics’ most recent Company Income Tax report, companies in Nigeria paid the government around N1.53 trillion in taxes in the second quarter of 2023. According to the Federal Inland Revenue Service, CIT is a 30% tax levied on corporate profits.
According to NBS data, the amount collected in the second quarter of 2023 is greater than the total amount collected in 2015 (N1.38tn), 2016 (N1.02tn), 2017 (N1.25tn), and 2018 (N1.41tn).
The previous largest amount collected was N810.19 billion in the third quarter of 2023, while the lowest was N155.96 billion in the first quarter of 2017.
VAT, a 7.5% consumption tax paid by the end consumer of goods, grew by 10.11 percent year on year in the second quarter to N781.35 billion from N709.59 billion in the first quarter of the
The NBS commented on taxes, saying, “On the aggregate, CIT for the second quarter of 2023 was reported at N1.53tn, indicating a quarterly growth rate of 226.40 percent from N469.01bn in the first quarter of 2023.” In the second quarter of 2023, local payments totaled N1.02 trillion, while foreign CIT payments totaled N505.91 billion.”
“On the aggregate, VAT for the second half of 2023 was reported at N781.35bn, showing a growth rate of 10.11 percent on a quarter-on-quarter basis from N709.59bn in the first quarter of 2023,” it said of VAT. In the second quarter of 2023, local payments totaled N512.03 billion, foreign VAT payments totaled N142.63 billion, and import VAT contributed N126.69 billion.”
CIT growth was highest in the water supply, sewerage, waste management, and remediation sectors (626.52%), followed by accommodation and food service activities (585.11%). The three largest contributors to CIT were the manufacturing sector (25.63%), the banking and insurance industry (24.47%), and information and communication (20.30%).
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The VAT rise was highest in extraterritorial organizations and bodies (212.06%) and real estate operations (123.09%). The three largest contributors to VAT were manufacturing (29.64%), information and communication (21.19%), and the financial and insurance industries (11.18%).
In order to improve tax revenues, the Federal Government recently announced plans to review and remove tax breaks granted to corporations doing business in Nigeria. According to Mr. Taiwo Oyedele, Chairman of the Presidential Tax Reform Committee, Nigeria’s total tax incentive to firms is approximately N6 trillion per year.
“When you don’t look at your incentive regime, it can get to the point where it becomes a distortion for economic growth because some people benefit and others don’t, but they operate in the same sector and can’t compete,” he added. You must also consider the cost-benefit ratio.”
“As a country, if we give away N1, we must be able to convince ourselves that the benefit we receive is greater than N1.” Otherwise, that becomes an incentive for some individuals rather than the economy.”
Source: PunchNG
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