FIRS, Others Rakes N450.2bn Tax from GTCO, Zenith Bank, Four Other D-SIBs in Three Years

Darasimi Adebisi

The Federal Inland Revenue Service (FIRS), and other tax authorities in countries where Nigerian banks operate, generated a total of N450.2billion as tax income from six Domestic- Systemically Important Banks (D-SIBs) in three years, a report by the National Bureau of Statistics (NBS) has revealed.

These six D-SIBs are GTCO Plc (formally Guaranty Trust Bank), Zenith Bank Plc, Ecobank Transnational Incorporated Plc, FBN Holdings Plc, Access Bank Plc, and United Bank for Africa (UBA) Plc.

Banks in Nigeria are required by law to remit tax income to state and federal government agencies where they have branches.

Aside paying statutory rate of 30 per cent of total profit as company’s income tax, banks are meant to pay Education Tax, National Information Technology Development Agency (NITDA) Tax and Nigeria Police Trust Fund levy.
The report revealed that tax paid to FIRS and other revenue agencies by the D-SIBs dropped significantly in 2020, majorly caused by COVID-19 pandemic.

Specifically, tax income by these six D-SIBs in 2020 was N142.2billion, about 15.05per cent drop from N17.39billion in 2019.

A further interrogation of the NBS report revealed that the banks, in 2018, remitted N140.61billion as income tax to FIRS, among other revenue-generating agencies in states and jurisdictions where they have branches.

The National Bureau of Statistics in its report also disclosed that Banks & Financial Institutions in 2020 paid N140.08billion as company income tax, a 1.83 per cent drop from N142.69billion reported in 2019.

In 2018, NBS reported N96.4billion income tax paid by banks & other financial institutions in the country.

THISDAY reliable gathered that GTCO, Zenith Bank and ETI are the leading banks in terms of tax income remittances, amid growing profit generation in 2020.

In the last three years, ETI’s income tax increased to N116.53billion, while that of GTCO and Zenith Bank was N102.37billion and N93.96billion, respectively.

UBA’s income tax between 2020 and 2018 was N68.45billion, as Access Bank paid a total of N45.99billion income tax to FIRS, among other revenue generating agencies.

In addition, FBN Holdings in the chart paid a sum of N22.9billion as income tax between 2020 and 2018.
As regards 2020 financial year, four D-SIBs reported decline in income tax amid increasing deferred tax liabilities.

EIT’s income tax dropped by 30.05 per cent in 2020 to N34.13billion from N48.8billion reported in 2019 while Zenith Bank tax expenses moved to N25.3billion in 2020, a 26.57 decline from N34.45 billion reported in 2019.

FBN Holding plc also reported 12.2 per cent drop in income tax to N8.11billion in 2020 from N9.24billion in 2019, while UBA’s Income tax expense closed 2020 at N18.1billion from N22.12billion in 2019.

Access Bank reported N19.9billion tax expenses in 2020 from N17.8billion in 2019 as GTCO reported N36.66billion tax income from N34.84billion in 2019.

Analysts have expressed that listing on the Nigerian Exchange Limited (NGX), means banks must be transparent in tax payment to government agencies where they operate.

They hinted that failure to pay might force government to shut banks branches and truncate banking operations.

Speaking on the performance of the equities market recently, the Head, Economic Research and Policy Management, Securities and Exchange Commission (SEC), Mr Afolabi Olowookere had disclosed that out of the N5.8trillion realised by the FIRS in 2018, listed companies contributed about 60 per cent of the value.

A tax expert at a PwC Nigeria, Mr. Taiwo Oyedele, in a chat with THISDAY noted that banks income tax remittance is facilitating economy growth, which is similarly to telecommunication sector.

According to him, taxes paid by banks are based on laws and regulations, stressing that banks are meant to play by the rules, which has to do with full disclosure.

He explained further that, “A good number income that banks generated are exempted from tax. Banks are not meant to pay tax income on treasury Bills, government bond and agriculture loan.

“If you take all of those, sometimes you will find out that tax banks are paying effective on their profit maybe be less compared to manufacturing companies not that they are not deliberately not paying taxes.

“The N450.2billion tax income between 2020 and 2018 by these banks is significant. These banks contribution is significant bearing it in mind that they also pay IT levy and they also employ a lot of staff. Their staff also remits tax to state government, which also contribute to economic growth.”

He stressed the need for banks to come together and do a total tax income contribution to the country’s Gross Domestic Product (GDP).

The Vice-President, Highcap Securities Limited, Mr. David Adnori stated that banking sector 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.”

According to the Chief Economist/Head, Investment Research, PanAfrican Capital Holdings, Moses Ojo, financial institutions are operating under CAMA that mandated 30 per cent payment of the CIT, two per cent as Education tax.

“These taxes are remitted to the federal government. The only tax that goes to the state government is PAYE, ”he said.

On economy development, He stated that: “Banks income tax contributed significantly to budget finance of the federal and state government over the years.”