Amid multiple taxations, the audited results released so far by 14 companies listed on the Nigerian Exchange Limited (NGX) revealed that MTN Nigeria Communication Plc, Dangote Cement and 12 others paid a total of N461.2 billion as tax in 2022 to the Federal Inland Revenue Service (FIRS), other tax authorities in Nigeria and African countries where they operate.
The amount paid last year represents an increase of 10.7 per cent over the N416.64 billion reported by these 14 companies in the 2021 financial year.
The sectors covered by THISDAY are companies in the cement manufacturing, petroleum marketing, telecommunication, Fast-moving consumer goods (FMCG), among others are top players in other African countries.
The 14 firms reported a whopping sum of N1.09 trillion in profit after tax in the period under review, an increase of 12.6 per cent from N965.4 billion reported in 2021.
Their companies’ tax expenses contributed to N2.83 trillion company income tax paid in 2022 financial year, according to the National Bureau of Statistics (NBS) in its latest company income tax report provided by the Federal Inland Revenue Service (FIRS).
Companies operating in Nigeria are required by law to remit tax income to state, federal government agencies, among other agencies where they operate.
Aside from paying the statutory rate of 30 per cent of total profit as the company’s income tax, companies operating in Nigeria are meant to pay Tertiary Education Tax, National Information Technology Development Agency (NITDA) Tax and Nigeria Police Trust Fund Levy.
The tertiary education tax is imposed on every Nigerian company at the rate of 2.5 per cent of the assessable profit for each year of assessment, while the Act that established the Nigeria Police Trust Fund was meant to receive funds from a levy of 0.005 per cent of the net profit of companies operating a business in Nigeria and other various sources, which will be utilized for the training and welfare of personnel of the Nigeria Police Force.
THISDAY analysis of the results showed that MTN Nigeria Communication, followed by Dangote Cement paid the highest tax to revenue-generating agencies where they operate in 2022.
As MTN Nigeria Communication reported N175.1 billion tax expenses in 2022, an increase of 27 per cent from N138.03 billion in 2021, Dangote Cement declared N141.69 billion tax expenses in 2022 from N173.93 billion in 2021.
The combination of Dangote Cement, Dangote Sugar Refinery and Nascon Allied Industries where Aliko Dangote has a major stake as Chairman and investors paid a total sum of N172.16 billion as tax expenses in 2022 from N187.16billion in 2021.
Commenting, the CEO, MTN Nigeria, Mr. Karl Toriola in a statement stated that, “Compliance remains at the heart of our business and embedded in the strategic priorities that underpin our Ambition 2025 strategy.
“Accordingly, we are pleased to have been recognised by the NGX as the listed company with the highest level of compliance with the Rules of the Exchange and other applicable laws and regulations.
“This follows our recognition by FIRS as one of the most tax-compliant organisations in Nigeria. These demonstrate our commitment to and track record of compliance and sound governance.
“Our Road Infrastructure Tax Credit (RITC) project reached a significant milestone with the Federal Executive Council’s approval to restore and refurbish the 110-kilometre Enugu-Onitsha Expressway. This has paved the way for the commencement of the project, which, once completed, will positively impact the lives of Nigerians and contribute to the country’s overall economic growth.”
Analysts have expressed the importance of companies remitting taxes to government agencies, stressing on the role played by listing on the Exchange that gives room for companies to be transparent in tax payment to government agencies where they operate.
Capital market analyst, Mr. Rotimi Fakeyejo said the failure to pay tax might force the government to shut branches and truncate operations, stating that the tax system in Nigeria must be streamlined to enhance effective remittance in order not to create dispute between the company and government.
Fakeyejo, however, added that tax remittance is meant to facilitate economic growth and companies must always oblige in promoting remittance, most especially to state governments where they have branches.
According to him, taxes paid by companies are based on laws and regulations, stressing that companies are meant to play by the rules, which has to do with full disclosure.
He explained further that, “A good number of income that companies generate are exempted from tax. Banks are not meant to pay tax income on treasury Bills, government bonds and agriculture loans.
“If you take all of those, sometimes you will find out that tax banks are paying effectively on their profit, maybe less compared to manufacturing companies, not that they are not deliberately not paying taxes.”
He stressed the need for banks to come together and make a total tax income contribution to the country’s Gross Domestic Product (GDP).
On his part, Vice-President, Highcap Securities Limited, Mr. David Adnori stated that listed companies over the years maintained stronger profit, which is meant to contribute to government tax revenue.
He expressed that most companies that were reluctant to come to the stock market were hiding their financials or were scared of take-over by wealthy Nigerians.
He said: “Once the government can work together with the FIRS to enforce tax laws, there would be no hiding place for companies. Thus, they will be forced to come to the market.”