The National Bureau of Statistics, NBS has disclosed that the funds generated fom Company Income Tax (CIT) increased by 32.84% in the first quarter of 2021 (Q1 2021) to N392.77 billion from N295.68 billion in the same period in 2020.
Disclosing this in a report by NBS, titled, ‘Company Income Tax by Sectors (Q1 2021)’, it stated that:
“Data on Company Income Tax breakdown by sectors for Q1 2021 reflected that the sum of N392.77bn was generated as CIT as against N295.72bn generated in Q4 2020 and N295.68bn generated in Q1 2020 representing 32.82% increase Quarter-on-Quarter and 32.84% increase Year-on-Year.”
Also disclosing the companies that generated the highest amount of CIT resulting in the overall increase in the funds generated by the government, NBS revealed that:
“Breweries, Bottling and Beverages generated the highest amount of CIT with N23.26bn generated and closely followed by Professional Services including Telecoms which generated N18.17bn, State Ministries & Parastatals generated N17.35bn while Textile and Garment Industry generated the least and closely followed by Mining and Automobiles and Assemblies with N13.49m, N34.40m and N73.57m generated respectively.
“Out of the total amounted generated in Q1 2021, N152.33bn was generated as CIT locally while N184.59bn was generated as foreign CIT payment. The balance of N55.85bn was generated as CIT from other payments.”
WHAT YOU SHOULD KNOW ABOUT CIT
The Company Income Tax Act (CITA) is the principal law that regulates the taxation of companies in Nigeria. The tax regime in Nigeria is a multi-level tax system, which simply means that taxation is administered by the three tiers of government.
The Federal Inland Revenue Service (FIRS) administers or oversee the income tax for companies.
Companies Income Tax (CIT) is a tax on the profits of registered companies in Nigeria. It also includes the tax on the profits of foreign companies carrying on any business in Nigeria. The CIT is paid by limited liability companies inclusive of the public limited liability companies.
Resident companies are liable to corporate income tax (CIT) on their worldwide income while non-residents are subject to CIT on their Nigeria-source income. Corporate income tax is based on accounting profits adjusted for tax purposes.
The CIT is currently charged at the rate of 30% for companies having more than N100 Million Naira turnover. It is also charged at the rate of 20% for companies with a turnover between N25 Million and N100 Million. The tax is assessed on a preceding year basis (i.e. tax is charged on profits for the accounting year ending in the year preceding assessment).
The companies having less than N25 Million turnover are not liable to pay company income tax in line with the Finance Act 2019.
In respect of business profits, a non-resident company that has a fixed base or a permanent establishment (PE) in Nigeria is taxable on the profits attributable to that fixed base. As such, it is required to register for CIT and file its tax returns.