According to the National Bureau of Statistics (NBS), local payments accounted for N300.78 billion, while foreign CIT payments contributed N168.23 billion during the same period.
This decline in CIT collections raises concerns about the economic impact and challenges faced by businesses in Nigeria.
Tax Decline
On the aggregate, Company Income Tax (CIT) for Q1 2023 was reported at N469.01 billion, indicating a growth rate of -37.79% on a quarter-on-quarter basis from N753.88 billion in Q4 2022, the NBS report said.
“Local payments received were N300.78 billion, while Foreign CIT Payment contributed N168.23 billion in Q1 2023. On a quarter-on-quarter basis, the financial and insurance activities recorded the highest growth rate with 50.42%, followed by construction with 42.32%.”
Low growth
The NBS report further revealed that in terms of sectoral contributions, water supply, sewerage, waste management, and remediation activities recorded the lowest growth rate at – 69.38%, followed by other service activities at -60.13%.
“In terms of sectoral contributions, the top three largest shares in Q1 2023 were financial & insurance activities with 22.94%; manufacturing with 20.91%; and information and communication with 11.89%.
“Conversely, the activities of households as employers, undifferentiated goods- and services-producing activities of households for own use recorded the least share with 0.01%, followed by water supply, sewerage, waste management, and remediation activities with 0.04%; and activities of extraterritorial organizations and bodies with 0.12%.”
They also added that on a year-on-year basis, CIT collections in Q1 2023 decreased by 14.96% from Q1 2022.
What contributed to the decline
Reduction in Nigeria’s economic growth in Q1 2023, which has been attributed to the negative consequences of the naira redesign policy of the CBN, was a major contributor. This is because so many companies lacked the cash to make transactions in vital parts of the informal chain.
Nigeria’s Gross Domestic Product (GDP) grew by 2.31% year-on-year in real terms in the first quarter of 2023, indicating a 1.21% points lower than 3.52% recorded in the previous quarter and 0.8% lower compared to 3.11% recorded in the corresponding period of 2022.
The Statistics Bureau blamed the slowdown in GDP growth rate on the naira scarcity which occurred in the first quarter of the year as the central bank refused to back down on its naira swap policy, they said:
“The reduction in growth is attributed to the adverse effects of the cash crunch experienced during the quarter.”
Source: www.nairametrics.com
