Companies Income Tax (CIT) is a tax collected on the profits of registered companies in Nigeria. This also includes the tax on the profits of foreign companies carrying on any business in any part of Nigeria. CIT is one of the many means through which the country generates revenue. Companies founded in Nigeria which are referred to as Resident companies are liable to remit CIT on their global income while non-residents are required to remit CIT on their Nigeria-source income. Corporate income tax is based on accounting profits adjusted for tax purposes.
CIT is currently charged at the rate of 30% for companies having more than N100 Million Naira turnover. It is also charged at the rate of 20% for companies with a turnover between N25 Million and N100 Million. The tax is charged on profits for the accounting year ending in the year preceding assessment. Companies with less than N25 Million turnover are not liable to pay CIT which is in line with the Finance Act 2019.
According to the CIT Report recently published by the National Bureau of Statistics (NBS) the breakdown by sectors for Q3 2020 reflected that the sum of N416.01bn was generated as CIT as against N402.03bn generated in Q2 2020 which implies a 3.48% increase in the revenue generated in the two quarters.
Professional Services which included Telecommunications, generated the highest amount of CIT with N55.52bn generated and closely followed by Other Manufacturing which generated N42.03bn then Banks & Financial Institutions generated N24.05bn.
Mining generated the least and closely followed by Textile and Garment Industry and Local Government Councils with N120.93m, N167.51m and N321.72m generated respectively. Out of the total amounted generated in Q3 2020, N244.70bn was generated as CIT locally while N70.34bn was generated as foreign CIT payment. The balance of N100.97bn was generated as CIT from other payments.
The Federal Inland Revenue Service (FIRS) is solely in charge of overseeing CIT for companies; it is best to be on the good books of the FIRS and avoid penalties due to lack of compliance. You need to ensure you are not under paying or overpaying your CIT or better still, ensure that you comply with the CIT as at when due. To achieve all these, you need the assistance of a Tax Manager.
Is your organisation in need of an efficient and effective tax manager to handle your CIT computations and compliance needs? Look no further as Taxaide’s licensed tax practitioners can assist your organisation with CIT compliance requirements.
For more information on CIT and all tax-related issues, please do not hesitate to contact us at:
Tel: +234 700 TAXAIDE (070 829 2433), +234 1 631 0971
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