Nigerian Manufacturers Witness a 29% Surge in Income Tax Payments in Q1 2023

Nigerian manufacturers paid 29% more income tax in the first quarter (Q1) of 2023 than in the same period of 2022, according to the latest report from the National Bureau of Statistics (NBS).

The report showed that manufacturers operating in the country paid N62 billion in income tax in the quarter under review, compared to N44 billion paid in the first quarter of 2022.

The sector contributed the most in income tax payments followed by the information and communication technology (ICT) and financial services sectors.

In addition to the rise in income tax payments, VAT collections from manufacturers also saw a notable boost to N129 billion, a 13% increase from the N112 billion reported in the corresponding period of 2022.

The NBS report showed a 60% increase in the total taxes paid by manufacturers to the Federal Government in 2022 as manufacturers paid N839.6 billion, up from N524 billion reported in the previous year.

Furthermore, the statistics reveal a substantial increase in manufacturing company income tax, soaring from N235 billion to N468.59 billion. VAT collections from the sector also experienced a significant upturn, climbing from N288.4 billion in 2021 to N477.43 billion.

It is important to note that these tax figures represent the income tax and VAT payments made by manufacturers and do not encompass other duties and levies paid to other government agencies, such as the Nigeria Customs Service.

However, the sharp rise in tax rates has not been without its critics. Last month, Francis Meshioye, the President of the Manufacturers Association of Nigeria, urged the Federal Government to reconsider the 2023 Fiscal Policy Measures scheduled to take effect on June 1, 2023.

Meshioye expressed concern over the exponential and burdensome increase in excise duties, particularly targeting the beer and tobacco industries. The excise on beer products surged by approximately 200%, while the tobacco industry faced a tax burden five times higher than other sectors.

He said, “The rate of increase is exceptionally excessive and not consistent with best practice globally. For instance, the excise for beer was effectively increased by about 200 per cent, translating to a tripling of excise on the product.

“The increase is coming at a time when the manufacturing sector is immersed in unprecedented crisis and an acute recession, due to extraordinary challenges, namely: sustained scarcity of naira, which has led to a crash in consumer purchases; limited access to foreign exchange, which has led industry to purchase foreign exchange from the parallel market, thereby increasing costs; record inflation, which further drive up cost of operation and prices of products and a struggling economy.”