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    Wednesday, March 16, 2022

    Dangote Cement, MTN Nigeria Lead 14 Others in N589.6bn Tax to FIRS, Others

    Results released so far by 17 companies listed on the Nigerian Exchange Limited (NGX) has revealed that they paid a total of N589.6 billion as tax in 2021 to the Federal Inland Revenue Service (FIRS), other tax authorities in Nigeria and African countries where they operate.

    The amount paid last year represents an increase of 39 per cent over the N371.56 billion reported by these 17 companies in 2020.

    Nigeria’s cement manufacturing companies, banks, petroleum marketing companies among others are top players in other African countries.

    THISDAY analysis of the results showed that Dangote Cement Plc, followed by MTN Communication Nigeria paid the highest tax to revenue-generating agencies where they operate.

    Ecobank Transnational Incorporated (ETI) toped banking sector in tax paid to government revenue agencies in over 33 countries where it operates in Africa, among other jurisdictions.

    Companies are required by law to remit tax income to state, federal government agencies, among other agencies where they operate.

    Aside from paying the statutory rate of 30 per cent of total profit as the company’s income tax, companies operating in Nigeria are meant to pay Tertiary Education Tax, National Information Technology Development Agency (NITDA) Tax and Nigeria Police Trust Fund Levy.

    The tertiary education tax is imposed on every Nigerian company at the rate of 2.5 per cent of the assessable profit for each year of assessment, while the Act that established the Nigeria Police Trust Fund was meant to receive funds from a levy of 0.005 per cent of the net profit of companies operating a business in Nigeria and other various sources, which will be utilized for the training and welfare of personnel of the Nigeria Police Force.

    THISDAY analysis showed that Dangote Cement reported 79 per cent increase in tax expenses to N173.93 billion in 2021 from N78.86 billion reported in 2020. Notably, Dangote Sugar’s tax paid in 2021 dropped by 24.5 per cent to N11.97 billion from N15.85 billion reported in 2020.

    Primary contributors to MTN Nigeria’s tax expenses was 42 per cent increase in company income tax to N128.65billion in 2021 from N90.78billion in 2020, while Education levy closed 2021 at N13.34billion, an increase of 29 per cent from N10.32billion reported in 2020.

    From the banking sector, ETI’s reported an increase of 56.13 per cent in tax paid to revenue collecting agencies in Nigeria, other African countries to N53.3billion in 2021 from N34.13billion reported in 2020.

    Guaranty Trust Holding Company (GTCO) came close to ETI with tax expenses at N46.66billion in 2021, an increase of 27.3 per cent from N36.7billion in 2020.

    Analysts have expressed the importance of companies remitting taxes to government agencies, stressing on the role played by listing on the Exchange that gives room for companies to be transparent in tax payment to government agencies where they operate.

    Capital market analyst, Mr. Rotimi Fakeyejo hinted that failure to pay tax might force the government to shut branches and truncate operations, stating that the tax system in Nigeria must be streamlined to enhance effective remittance in order not to create dispute between the company and government.

    Fakeyejo’s comments his on the heels of some states’ government in 2021 shutdown banking operations in the states

    Specifically, the Kaduna State Internal Revenue Service (KADIRS) in 2021 sealed the head offices and other branches of four banks over N300.5 million tax defaults.

    The KADIRS Executive Chairman, Zaid Abubakar had explained that: “We have sent demand notices several times as required by law, but the banks refused to come forward to pay taxes due to the state. There is, however, a positive response from the affected banks. They have made part payment and signed commitments to settle the outstanding.”

    Fakeyejo, however, added that tax remittance is meant to facilitate economic growth and companies must always oblige in promoting remittance, most especially to state governments where they have branches.

    According to him, taxes paid by companies are based on laws and regulations, stressing that companies are meant to play by the rules, which has to do with full disclosure.

    He explained further that, “A good number income that banks generated are exempted from tax. Banks are not meant to pay tax income on treasury Bills, government bond and agriculture loan.

    “If you take all of those, sometimes you will find out that tax banks are paying effective on their profit maybe be less compared to manufacturing companies not that they are not deliberately not paying taxes.

    He stressed the need for banks to come together and do a total tax income contribution to the country’s Gross Domestic Product (GDP).

    Commenting, Vice-President, Highcap Securities Limited, Mr. David Adnori stated that listed companies over the years maintained stronger profit, which is meant to contribute to government tax revenue.

    He expressed that most companies that were reluctant to come to the stock market were hiding their financials or were scared of take-over by wealthy Nigerians.

    He said: “Once the government can work together with the FIRS to enforce tax laws, there would be no hiding place for companies. Thus, they will be forced to come to the market.”

    In addition, an analyst at PAC Holdings, Mr. Wole Adeyeye stated that financial institutions are operating under CAMA that mandated 30 per cent payment of the CIT, two per cent as Education tax.

    He added that: “These taxes are remitted to the federal government. The only tax that goes to the state government is PAYE. Companies’ income tax has contributed significantly to budget finance of the federal and state government over the years.”

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