July 13, 2024

Income tax paid by electricity, gas companies declined by 76% in Q4, 2022 – NBS

Oredola Adeola

The income tax payment by electricity, gas, steam, and air conditioning companies significantly dropped in the fourth quarter, 2022 (Q4,2022) to N5,531,501,965.06 from N12,335,446,824.32 that was recorded in Q3,2022, representing a decline of 76.16% on a quarter-on-quarter basis, even as aggregate Company Income Tax (CIT) for Q4, 2022 was reported at N753.88 billion.

This was revealed in the latest report by the National Bureau of Statistics (NBS) for the fourth quarter, 2022, obtained by EnergyDay on Wednesday.

According to NBS the N5,531,501,965.06 CIT paid by electricity, gas companies in Q4,2022, was the lowest compared with N9,598,877,508.29 (Q2,2022) and  N12,335,446,824.32(Q3,2022).

Meanwhile, the Q4,2022 CIT for the sector was a bit higher than N3,426,076,904.99(Q1,2022) CIT paid the companies in the sector in 2022.

EnergyDay’s check on a year-on-year basis, the growth rate for electricity, gas, steam, and air conditioning CIT payment increased in Q4 2022 by 6.7 percent compared with Q4 2021 which recorded N5,171,835,670.80 .

On the aggregate, Company Income Tax (CIT) for Q4 2022 was reported at N753.88 billion, indicating a growth rate of -6.95% on a quarter-on-quarter basis from N810.19 billion in Q3 2022.

However, on a year-on-year basis, CIT collections in Q4 2022 increased by 116.75% from Q4 2021

The NBS report showed that local payments received were N353.90 billion, while Foreign CIT Payment contributed N399.98 billion in Q4 2022.

On a quarter-on-quarter basis, the Water supply, sewerage, waste management and remediation activities recorded the highest growth rate with 57.40%, followed by Activities of households as employers, undifferentiated goods- and services-producing activities of households for own use with 45.19%.

On the other hand, Information and communication activities had the lowest growth rate with – 65.75%, followed by Arts, entertainment and recreation activities with -64.09%.

In terms of sectoral contributions, the top three largest shares in Q4 2022 were Manufacturing with 31.20%; Financial & insurance activities with 12.96% and Information and communication activities with 12.77%.

Conversely, the Activities of households as employers, undifferentiated goods- and services producing activities of households for own use recorded the least share with 0.01%, followed by Water supply, sewerage, waste management, and remediation activities with 0.12%; and activities of extraterritorial organizations and bodies with 0.14%.

EnergyDay gathered that under the Companies Income Tax Act (CITA) the law provides exclusive incentives for gas utilization for the upstream and downstream sectors.

The Company Income Tax (CIT) is mandated to be paid by companies in Nigeria based on the profits made periodically. It is administered by the Federal Inland Revenue Service (FIRS).

CIT is currently charged in three thresholds in accordance with the company’s turnover in the following pattern, company with less than N25 Million turnover- 0% on profit; company with a turnover between N25 Million and N100 Million- 20% on assessable profit; and company with above N100 Million turnover- 30% on assessable profit.

Meanwhile foreign companies not resident in Nigeria, but with a fixed base in Nigeria are only required to pay company income tax on their incomes derived from Nigeria.

Small companies in the manufacturing and export sector, the taxable profit imposed is 20%, if they have a turnover of below N1, 000,000 (One Million Naira) and are still within 5 years of operation.

Revenue generated from CIT is usually disbursed to the three tiers of government through the federation accounts allocation committee (FAAC).