Against the backdrop of pressures on the Federal Government’s finances and 2020 budget revenue estimates, an indication has emerged that the government may have already recorded a shortfall of 17.3 per cent in the Company Income Tax, CIT, as at third quarter of 2020, Q3’20.
The Federal Government had, in the budget 2020, projected to generate N1.798 trillion in the full year and N1.348 trillion by Q3’20 from the CIT. But a data from National Bureau of Statistics,( NBS), show that actual CIT revenue realised for the period under review was N1.113 trillion, about N235 billion or 17.4 per cent shortfall from the 2020 budget target.
Economists and financial analysts have opined that the shortfall in income tax revenue is not unexpected in view of the global Coronavirus, COVID-19, which led to a nationwide lockdown and also a huge drop in oil price and oil revenue.
They, however, commended the listed companies for their resilience despite the economic headwinds while calling on government to provide necessary incentives to attract more companies to be listed on the Exchange.
Meanwhile, the Minister of Finance, Budget and National Planning Mrs Zainab Ahmed, had disclosed that the new Finance Bill would require only companies doing a turnover of over N100 million to pay 30 per cent CIT while companies with turnover of between N25 million and N100 million annually will pay 20 per cent.
“Our assessment is that any business that has a turnover of less than N25million needs that break, not being taxed so they can invest in their businesses. And we reduced the tax for medium-size businesses from 30 per cent to 20 per cent so they can have more resources that they can plough back in their business. These are the largest employers of labour. The federal and state governments have a total labour force of less than one per cent of the population,” Ahmed added.
Financial analysis show that top 95 companies listed on the NSE in various sectors captured recorded N271.678 billion, thus accounted for 24.3 per cent of the actual revenue of N1.113 trillion from the companies’ income tax for the period under review.