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 a year earlier. The divergence between the two tax streams has sparked analysis about the state of corporate profitability in Nigeria.
Opeyemi Ajetunmobi, head of advisory and research at a Lagos-based investment and advisory firm, noted the contrast on LinkedIn, stating that while VAT growth suggests ongoing economic activity, the CIT decline points to weakening corporate profits. Bolanle Daniel-Utere, finance director at a free trade zone, attributed the drop to rising operating costs, elevated borrowing rates, and inflationary pressures. Faith Iyoha, an economist, explained that businesses are recording higher sales but are unable to maintain profit margins due to rising production costs and weak consumer purchasing power.
Foreign companies contributed N828.82 billion in CIT during the quarter, compared to N538.91 billion from domestic firms, highlighting a growing reliance on multinational businesses for corporate tax revenue. Ajetunmobi observed that multinationals and export-oriented firms now account for more than 60 percent of corporate tax collections. Despite broader challenges, some Nigerian firms reported strong performance: MTN Nigeria posted a 165.9 percent increase in profit after tax to N355.5 billion, while Dangote Cement saw a 35 percent rise in profit before tax to N421.1 billion. The NBS data coincides with Nigeria's headline inflation rate rising to 15.69 percent in April 2026, with food inflation at 16.06 percent and core inflation at 15.86 percent.
The finance director at a free trade zone points to rising costs as the cause of shrinking profits, yet MTN and Dangote Cement managed significant gains under the same conditions. This suggests cost pressures are not affecting all firms equally, raising questions about structural advantages held by large corporations. The tax data implies smaller domestic businesses are bearing a disproportionate share of the economic strain. Nigeria's corporate tax base is increasingly reliant on foreign and export-focused firms, not homegrown enterprises.
Editorial note: AI-assisted opinion, not established fact. Full disclaimer →
