By Charles Ike-Okoh
FRI, 27 NOV, 2020-theGBJournal- National Bureau of Statistic’s Company Income Tax by Sectors report published late Thursday shows a significant drop in foreign company income tax (CIT) payment to N70.34bn, a far cry from the N119.456 billion generated in Q2 2020, and N127.450-Q1 2020.
The drop, according to tax expats can be explained by the sharp -3.62% negative growth in gross domestic product (GDP) in Q3 2020 in real terms, the squeeze in companies bottomline due to the coronavirus pandemic and the consequent squeeze in earnings per share (EPS). The drop in EPS they say, precisely explains the drop in tax revenue on dividends.
Foreign companies earn income majorly from dividends, interest, royalty and rent, and they are taxed by way of withholding tax deducted at source by the Nigerian payer as the final tax.
EXPLAINER: Unlike a Nigerian company which is taxable on its worldwide income, a foreign company is liable to tax in Nigeria only on its profit attributable to the business carried on in Nigeria.
According to the NBS, the Foreign payments are bulk payment from JP Morgan account ‘’which cannot be attributed to our offices or sectors.’’ Other payments are payment through E-transact, E-tax pay, and remitta (GIFMIS).
The NBS report also shows that out of the total amounted generated in Q3 2020, N244.70bn was generated as CIT locally. The balance of N100.97bn was generated as CIT from other payments.
Overall, the sum of N416.01bn was generated as CIT as against N402.03bn generated in Q2 2020 and N520.89bn generated in Q3 2019, representing 3.48% increase Quarter-on-Quarter and -20.13% decrease Year-on-Year.
Professional Services including Telecoms generated the highest amount of CIT with N55.52bn generated and closely followed by Other Manufacturing which generated N42.03bn.
Banks & Financial Institutions generated N24.05bn while Mining generated the least and closely followed by Textile and Garment Industry and Local Government Councils with N120.93m, N167.51m and N321.72m generated respectively.
The Breweries, Bottling and Beverages generated N14.069 billion in CIT during the period.
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