Surge in Tax Payments from Foreign Companies in Nigeria

• Tax payments from foreign companies in Nigeria increased by 44% in the first nine months of 2024, reaching N2.57 trillion.
• Company Income Tax (CIT) from foreign firms rose by 42.49% from Q1 to Q2, but slowed in Q3, suggesting economic challenges.
• Revenue from Value-Added Tax (VAT) surged by 157% in the same period, reaching N1.28 trillion.
• The combined tax revenue from foreign companies surged 68.1% to N3.85 trillion in 2024.

Tax revenue from foreign companies operating in Nigeria has seen a significant increase of 44% in the first nine months of 2024, reaching N2.57 trillion, according to the National Bureau of Statistics (NBS). This marks a notable rise from N1.79 trillion in the same period last year, demonstrating growth in the federal government’s earnings from these companies.

The Company Income Tax (CIT), a 30% tax on company profits, saw a strong quarterly performance. From N598.1 billion in Q1, earnings surged by 42.49% to N1.12 trillion in Q2 but slowed to N852.3 billion in Q3, indicating a tough economic environment. Despite the slowdown in the third quarter, the increase in CIT is a reflection of the growing tax contributions from foreign firms like Google, Netflix, Meta, and others, which are subject to digital tax in Nigeria.

However, some of these foreign companies, particularly those in the digital and streaming sectors, such as Netflix, have faced challenges. Reduced patronage, influenced by inflation and the devaluation of the naira, has affected their bottom lines, with some firms reporting losses. The economic conditions have diminished the spending power of Nigerian consumers, affecting service uptake.

Meanwhile, VAT collections showed an even more impressive growth, with a 157.03% increase to N1.28 trillion, up from N498.3 billion in 2023. The VAT revenue data indicated that the government earned N435.7 billion in Q1, N395.7 billion in Q2, and N448.9 billion in Q3 of 2024.

Combined, the revenues from both CIT and VAT paid by foreign companies operating in Nigeria surged by 68.1%, totaling N3.85 trillion in the first nine months of 2024, compared to N2.29 trillion in the same period last year. This increase highlights a positive trend in tax collection, despite the broader economic challenges faced by businesses in the country.