Manufacturers’ income tax falls 6.85% to N145bn in Q4’23

Financial Markets

In apparent reflection of the hardship being faced by manufacturing companies in Nigeria, the income tax paid by the manufacturers fell by 6.85 percent quarter-on-quarter (QoQ) to N145.06 billion in the fourth quarter ended December 31, 2023 (Q$’23) from N155.72 billion in Q3’23.

The decline in income tax paid by manufacturers comes amidst the recent macroeconomic challenges facing the companies, especially foreign exchange (forex) volatility, naira devaluation and energy crises among others, which have resulted in dwindling fortunes manifested in declining revenue and pre-tax profit in the last one year.

These challenges have also resulted in the exit of some multinationals or closure of ground operations by some others in the past few months.

Recall that GlaxoSmithKline (GSK) Plc made headlines last following announcement of closure of ground operation in Nigeria and subsequent delisting from the Nigerian Exchange Limited due to forex losses and declining earnings.

Prior to GSK’s announcement, Unilever Nigeria Plc had announced the exit of its home care and skin care products from Nigeria. This is in addition to other unlisted companies (Sanofi-Aventi Nigeria, Bolt Foods, Jumia Foods and Equinor) that have closed operation in Nigeria

The latest Company Income Tax report for Q4’23 by the National Bureau of Statistics (NBS) specifically noted that income tax paid by manufacturing companies in the sector fell to N145.06 billion in Q4’23 from N155.72 billion in Q3’23.

However, the figure rose by 31.4 percent Year-on-Year (YoY) from N110.4 billion in Q4’2022.

Meanwhile, despite the constraints, analysis of the sectoral contribution shows that the manufacturing sector contributed the largest share at 12.84 percent to the aggregate Company Income Tax (CIT) valued at N1.13 trillion generated within the period.

This was followed by the financial and insurance activities sector with 6.25 percent or N70.6 billion total contributions to the aggregate CIT. The mining and quarrying sector, which is receiving increased attention by the government with determination to improve revenue generation from the sector, contributed 5.90 percent or N66.71 billion, while information and communication sector contributed N52.13 billion or 4.6 percent of the total.