Company Income Tax (CIT) collections fell by 31.05 percent to N1.37 trillion in the first quarter of 2026, down from N1.98 trillion in the same period of 2025, according to data from the National Bureau of Statistics (NBS). Over the same period, Value Added Tax (VAT) collections increased by 17.06 percent to N2.42 trillion, up from N2.06 trillion. The divergence between the two taxes has sparked concern, as VAT reflects transaction volume while CIT is tied to corporate profitability. Opeyemi Ajetunmobi, head of advisory and research at a Lagos-based investment and advisory firm, noted that the rise in VAT suggests ongoing economic activity, but the sharp drop in CIT indicates businesses are struggling to maintain margins.
Bolanle Daniel-Utere, finance director at a free trade zone, attributed the decline in CIT to rising operating costs, borrowing expenses, and inflationary pressure, despite continued turnover growth in some firms. Nigeria's headline inflation rate stood at 15.69 percent in April 2026, with food inflation at 16.06 percent and core inflation at 15.86 percent, compounding cost pressures. Foreign companies contributed N828.82 billion in CIT during the quarter, significantly more than the N538.91 billion from domestic firms. Ajetunmobi said this shows multinationals and export-oriented firms are contributing over 60 percent of corporate tax revenue, outpacing local businesses.
Some major firms reported strong earnings. MTN Nigeria posted a 165.9 percent increase in profit after tax to N355.5 billion, driven by data revenue growth and reduced foreign exchange exposure. Dangote Cement recorded a 35 percent rise in profit before tax to N421.1 billion as revenue reached N1.19 trillion and cost pressures eased. However, the overall CIT decline suggests many Nigerian businesses are generating sales but retaining less profit. The NBS data highlights a growing reliance on foreign firms for corporate tax revenue amid ongoing domestic cost challenges.
The finance director points to rising costs eroding profits, yet MTN and Dangote Cement report sharp increases in earnings, exposing a split between top-tier firms and the broader business environment. This gap suggests that while some companies can navigate high operating costs, most Nigerian businesses are losing ground. The tax data reveals that foreign firms now fund a majority of corporate tax revenue, a shift with direct implications for domestic economic resilience. If local firms continue to underperform, the tax base may become increasingly dependent on non-Nigerian-owned enterprises.
Editorial note: AI-assisted opinion, not established fact. Full disclaimer →
