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By Nkiruka Nnorom
Despite the worries they have expressed over harsh operating environment, manufacturing companies paid N212.97 billion income tax in the second quarter of 2024, Q2’24, up by 414.12 percent Quarter-on-Quarter, QoQ, from N43.2 billion in Q1’24.
The sharp QoQ increase in tax payment by the companies within the review period comes amidst the macroeconomic challenges facing businesses, especially foreign exchange (forex) scarcity and Naira depreciation, as well as energy crises among others.
However, according to the latest Company Income Tax report for Q2’24 released by the National Bureau of Statistics (NBS) the figure shows a decline by 18.9 percent Year-on-Year (YoY) from N262.73 billion in Q2’2023.
Meanwhile, details of the sectoral contribution shows that the manufacturing sector ranked second with 8.99 percent contribution to the aggregate Company Income Tax (CIT) revenue of the government amounting to N2.47trillion, generated within the period. Finance and insurance sector contributed the largest shares at 15.5 percent.
The information and communication, and mining and quarrying sectors came in the third and fourth positions with 7.84 percent and 6.92 percent contribution to the aggregate CIT respectively.
A financial analyst, Mr. David Adonri, Vice Chairman, Highcap Securities, believes that efficiency of tax collection by revenue agencies, as well as a better than expected performance by some companies in Q2’24 may have contributed to the surge in the tax collection from the sector.
He stated: “Some companies performed well in Q2 2024. Examples include Presco Plc, Okomu Oil Palm Plc, petroleum companies and banks amongst others. As a result, they paid higher taxes when compared to the same period last year.
“The efficiency of tax collection may also have increased. The improved performance of some companies may not be due to increased output but because of higher prices of their products.
“Most companies that are closing shops are heavily import dependent with low elasticity of demand for their products.”
The post Manufacturers income tax up 414.2% to N221.97bn appeared first on Vanguard News.
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