Q3: 21 NGX Listed Companies Paid N1.56tn Taxes on Strong PBT Growth

Kayode Tokede

Following resilient operational growth amid challenges, 21 blue chip companies listed on the Nigerian Exchange Limited (NGX) paid N1.56b trillion taxes to Federal Inland Revenue (FIRS) and other revenue agencies in nine months of 2024.

Data available from the unaudited reports and regulatory filings by these 21 companies on the NGX showed that a sum of N1.56 trillion taxes was paid in nine months ended September 2024, representing 154 per cent increase from N616.05 billion paid in nine months of 2023. 

These 21 companies consist of Cement manufacturing companies, Power generating firm, Deposit Money Banks (DMBs), Oil & gas companies, among others who play critical roles in Nigeria’s economic growth. 

The companies have seen significant growth in profitability in the period under review with average profit growth in double digits.

In the period under review, the 21 companies, declared N6.85 trillion profit before tax, an increase of 102.2 per cent from N 3.39 trillion declared in nine months of 2023. 

Companies 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 is utilised for the training and welfare of personnel of the Nigeria Police Force.

In the period under review, THISDAY gathered that Seplat Energy Plc paid the highest tax of all listed companies, followed by Ecobank, Zenith Bank Plc, and Dangote Cement Plc.

Seplat’s result and accounts showed income tax expense of N313.9 billion or $209.7 million, which includes a current tax charge of $65.7 million (nine months 2023: $54.3 million) and a deferred tax charge of $144.0 million (nine months 2023: deferred tax credit of $27.3 million). The higher current tax this year resulted from higher taxable profit due to lower costs for the period.

According to a company statement, “The deferred tax charge in 9M 2024 was driven by the FX gains and under lift for the period which are excluded from petroleum profit tax (PPT) calculations, giving rise to the creation of a deferred tax liability. This contrasts with nine months 2023’s deferred tax credit which arose due to creation of deferred tax assets from the overlift and FX loss recorded in the period. The effective tax rate for the period was 86 per cent (nine months 2023: 25per cent).”

The indigenous oil & gas company in its nine months unaudited results declared N366.7 billion profit before tax, representing an increase of 483 per cent from N62.85billion declared in nine months of 2023.

Cumulatively, eight banks paid about N887 billion as taxes in nine months of 2024, an increase of 130 per cent on about N386 billion paid for the 2023 business

The eight banks generated N5.21 trillion profit before tax, a growth of 108 per cent from N2.51 trillion reported in nine months of 2023. 

The growth in profitability of the banks was due mainly to business expansions, but in several instances, boosted by gains from foreign exchange revaluation gains. Nigeria had undergone a currency exchange management in 2023, with relative floating of the naira and a market-driven exchange system.

Analysts have expressed the importance of companies remitting taxes to government agencies, stressing that the Federal Government’s move to retroactively amend the Finance Act 2023 would have effect negative impact on banks’ profit and contribute to the nation’s economy growth.

The Senate had moved a bill to retroactively amend the Finance Act 2023, and impose a one-time windfall tax on banks’ foreign exchange gains realised in their 2023 financial statements.

Speaking, the 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.”