H1: MTN, Dangote Cement Lead as 23 Firms Paid FG, States N297.3bn Tax

Kayode Tokede

MTN Nigeria Communication Plc, Dangote Cement and 21 other companies paid Federal Inland Revenue Service (FIRS), state revenue agencies a sum of N297.3billion as tax expenses in half year (H1) ended June, a decline of 11.6 per cent from N336.2billion in the corresponding half year of 2022.

The 23 companies are made up of financial institutions, Fast-Moving Consumer Goods (FMCG), petroleum marketing, Cement manufacturing, Agro—allied among other sectors operating in Nigeria and outside.

With some reporting losses due to hike in operating expenses and foreign exchange losses, the 23 companies cummulatiely generated N1.06 trillion profit before tax in H1 2023 from N1.14 trillion in H1 2022. 

Aside from paying the statutory 30 per cent income tax, companies operating in Nigeria are meant to pay 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 Nigerian Police Force.

In the period under review, MTN Nigeria reported N71.7billion tax expenses in H1 2023, a decline of 18 per cent from N87.01billion in H1 2022, while Dangote Cement declared N61.26billion tax expenses in H1 2023, a decline of 34 per cent from N92.79billion reported in H1 2022.

The two companies in the period generated about N440.25 billion profit before tax in H1 20223, a decline of 17 per cent from N533.53billion in H1 2022.

The combination of Dangote Cement, Dangote Sugar Refinery and Nascon Allied Industries where Aliko Dangote has a major stake as Chairman and investor paid a total sum of N67.44 billion as tax expenses in H1 2023 from N107.02billion in H1 2022.

The CEO, MTN Nigeria, Mr. Karl Toriola had in a statement stressed that compliance remains at the heart of the telecommunication giant business and embedded in the strategic priorities that underpin its ambition 2025 strategy.

He added that “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.”

About 191 per cent increase in tax expenses impacted on Nigerian Breweries’ Plc performance in the period. The multinational company declared N20.25billion tax expenses in H1 2023 from N6.95billion in H1 2022, leading to N67.8 billion loss before tax in H1 2023 from N25.7billion in H1 2022.

Capital market 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.

They added that the new government reforms may hike tax expenses on listed companies and reduce profit generation.    

Earlier in July, President Bola Tinubu approved the establishment of a Presidential Committee on Fiscal Policy and Tax Reforms and appointed Taiwo Oyedele as the chairman of the committee.

The government said the establishment of the committee reflects Tinubu’s commitment to addressing challenges and bringing about transformative reforms in fiscal policy and taxation.

Capital market analyst, Vice-President, Highcap Securities Limited, Mr. David Adnori projected that listed companies may be paying more taxes this year, stressing on its importance on shareholders’ return.

He expressed that failure to pay tax by listed companies 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 the government.

He, 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, Chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion 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.”