Foreign companies operating in Nigeria, including tech giants, paid a staggering N3.85 trillion in taxes to the Federal Government during the first nine months of 2024. This figure marks a significant increase of 68.12% compared to N2.29 trillion collected during the same period in 2023, as reported by ECNETNews.
This tax figure encompasses both Company Income Tax (CIT) and Value Added Tax (VAT), as reported by the National Bureau of Statistics. Notably, revenues experienced a quarter-on-quarter surge: from N1.03 trillion in the first quarter to N1.30 trillion by the third quarter, with N1.52 trillion remitted during the second quarter.
A closer examination of the data reveals a substantial enhancement in tax remittance, with companies contributing N2.57 trillion in CIT thus far in 2024. This represents a remarkable 43.65% increase from the N1.789 trillion collected in the same timeframe last year.
Furthermore, VAT collections soared to N1.28 trillion, reflecting an impressive 157.03% uplift from N498.34 billion in 2023. This surge highlights a robust growth in tax revenue, driven by improved collection initiatives.
The Federal Inland Revenue Service explains that CIT is a 30% tax levied on corporate profits, while VAT is a 7.5% consumption tax incurred during purchases of goods and services, ultimately paid by the final consumer.
Quarterly analysis shows CIT earnings rose by 42.49%, jumping from N598.13 billion in Q1 to N1.12 trillion in Q2, and settling at N852.29 billion in Q3.
Similarly, VAT receipts were recorded at N435.73 billion in Q1, N395.74 billion in Q2, and N448.85 billion in Q3, marking an increase of N13.12 billion or 3.01%.
In 2020, the Federal Government initiated plans to tax foreign digital service providers, recognizing their substantial revenue generation in Nigeria. Companies involved in video streaming, social media, and digital content downloads are expected to remit digital taxes to the Federal Inland Revenue Service.
Despite operating without a physical office in Nigeria, companies like Netflix and social media platforms are heavily engaged in providing digital services to Nigerian consumers.
With expectations high for compliance, revenues from these companies are projected to increase further as more platforms fulfil their tax obligations.
Recent reports indicated that certain major platforms are yet to meet their tax filing requirements, while others like Google, LinkedIn, and Meta have successfully adhered to compliance measures.
The former Accountant-General of the Federation highlighted that tax revenue has become the nation’s predominant income source. This robust tax performance is crucial for the distribution of funds among the government’s various tiers.
As the Federal Government sets a tax revenue target of N19.4 trillion for 2024, over N18.5 trillion has already been remitted, signaling a positive outlook for fiscal growth in Nigeria.
