Corporate Tax Revenue Crashes: Nigeria Struggles Despite N1.77trn Haul in Q3 2024

Nigeria’s company income tax (CIT) revenue fell significantly in the third quarter (Q3) of 2024, dropping to N1.77 trillion—a 28.2 percent decline from the N2.47 trillion collected in Q2 2024. The National Bureau of Statistics (NBS), in its latest report, highlighted the drop as a potential indicator of underlying economic pressures affecting corporate earnings and compliance levels.

Local companies contributed N920.91 billion, while foreign firms accounted for N852.29 billion of the total CIT collected in Q3. Despite this quarter-on-quarter decline, the year-on-year comparison showed a slight growth of 1.37 percent from N1.74 trillion collected in Q3 2023.

The NBS data also revealed mixed performances across sectors. While electricity, gas, steam, and air conditioning supply recorded a remarkable 47.51 percent growth quarter-on-quarter, other key sectors underperformed. Financial and insurance activities, for instance, saw a sharp contraction of –70.04 percent, raising questions about the broader economic landscape.

Furthermore, the manufacturing sector stood out as the largest contributor to CIT in Q3, accounting for 25.47 percent of the total revenue, followed by mining and quarrying at 18.37 percent, and information and communication at 15.07 percent. However, sectors like accommodation and food services experienced significant downturns, shrinking by –73.32 percent.

The report comes amid ongoing discussions in the national assembly over tax reform bills, which propose increasing the annual tax threshold for small businesses to N50 million and gradually reducing the CIT rate from 30 percent to 25 percent by 2026. These reforms aim to alleviate the tax burden on businesses and stimulate economic growth.

The sharp drop in quarterly CIT revenue underscores the need for Nigeria to address systemic challenges affecting its tax collection processes and the performance of critical sectors. While legislative reforms may provide relief in the long term, immediate steps are needed to ensure a more robust and sustainable revenue base.