Company Income Tax payments by manufacturers fell by 68.25 per cent year-
on-year to N74.48bn in the first quarter of 2026, raising fresh concerns over the
productive sector’s capacity to withstand Nigeria’s new tax regime, weak
consumer demand and elevated operating costs.
An analysis of the Company Income Tax report released by the National Bureau
of Statistics showed that manufacturing CIT dropped by N160.11bn from
N234.59bn in Q1 2025 to N74.48bn in Q1 2026.
The decline was also sharp on a quarter-on-quarter basis, as tax payments by
manufacturers fell by 47.49 per cent from N141.84bn in Q4 2025, representing
a drop of N67.36bn within three months.
The NBS said the data was provided by the Nigeria Revenue Service and
reported by the bureau. It stated, “Company Income Tax in Q1 2026 stood at
N1.37tn, indicating a decrease of 8.08 per cent on a quarter-on-quarter basis
from N1.49tn in Q4 2025.”
The report also showed that total CIT collections fell by 31.05 per cent year-on-
year, suggesting that the decline in manufacturing was part of a broader fall in
company tax receipts, although the sector’s drop was more severe than the
national average.
Despite the steep fall, manufacturing remained one of the three largest
contributors to domestic CIT in the quarter. The sector accounted for 13.82 per
cent of domestic CIT, behind financial and insurance activities with 24.73 per
cent and mining and quarrying with 16.06 per cent.
In value terms, financial and insurance activities paid N133.27bn, mining and
quarrying paid N86.55bn, while manufacturing paid N74.48bn. However, when
measured against total CIT collections of N1.37tn, including foreign currency
payments, manufacturing contributed only about 5.45 per cent.
The report showed that domestic CIT contributed N538.91bn, while foreign CIT
payments accounted for N828.82bn, meaning foreign-related company tax
payments made up about 60.6 per cent of total CIT collections in Q1 2026.
The fall in manufacturing tax payments may reflect weaker profitability in the
sector, as firms continue to face high energy costs, exchange rate pressures,
expensive credit, logistics constraints and subdued purchasing power.
The first quarter also coincided with the transition into the new tax framework,
which took effect in January 2026, raising questions over whether compliance
adjustments, timing of payments or changes in company earnings affected
remittances during the period.
The weakness was not limited to manufacturing. The NBS said agriculture,
forestry and fishing recorded the steepest quarter-on-quarter decline at 73.52 per
cent, followed by construction at 63.15 per cent.
By contrast, water supply, sewerage, waste management and remediation
activities recorded the highest quarter-on-quarter growth at 485.71 per cent,
followed by activities of households as employers at 197.04 per cent.
The data suggests that while total company tax receipts remain large, the
composition is becoming more dependent on financial services, mining and
foreign tax payments, while core productive sectors such as manufacturing are
contributing less than they did a year earlier.
CIT is a tax levied on the profits made by companies operating in Nigeria. The
taxable amount is the company’s profits for the accounting year or period after
deducting allowable expenses and applicable reliefs as stipulated under CITA.
The new tax acts signed by President Bola Tinubu have brought the CIT down
to 25 per cent from 30 per cent.
The current Minister of Finance and Coordinating Minister of the Economy,
who was the Chairman of the Presidential Committee on Fiscal Policy and Tax
Reforms, Taiwo Oyedele, earlier said that the reduction of company income tax
to 25 per cent and the introduction of zero per cent CIT for firms with annual
turnovers of N100m or less will benefit Small and Medium Enterprises as well
as other corporates in the country.