Zenith Bank, UBA, 5 Others Pay N499bn On Income Tax Expenses

A total of seven Systematic Importance Banks (SIBs) of the Central Bank of Nigeria (CBN) have paid N499 billion on income tax expenses between 2011 and 2016, information gathered by Topnaija.ng has revealed.

Financial institutions under the category of SIB include Zenith Bank Plc, Access Bank Plc, Guaranty Trust Bank Plc (GTBank), parent company of FBN Limited, FBN Holdings, United Bank For Africa Plc (UBA), Ecobank Nigeria (Ecobank Transnational Incorporated) and Diamond Bank Plc.

According to findings by Topnaija.ng , the above financial institutions in six years under consideration have reported an estimated N2.6 trillion profit before tax as a result of Assets Management Corporation of Nigeria (AMCON) acquisition of their non-performing loans (NPLs) and prudent management of customers’ deposit.

In the six years under consideration, Topnaija.ng gathered that Zenith Bank has reported the highest profit before tax while GTBank reported the highest tax income expenses. Between 2011 and 2016, Zenith Bank has generated N677.9 billion profit before tax and paid N99.5 billion as tax income expenses to revenue collection agencies.

Also, GTBank in six years has generated N674 billion profit before tax while its tax income expenses hits N119 billion. The breakdown revealed that in 2011, the above financial institutions paid N46 billion tax income expenses and it increased to N52 billion in 2012. In 2013, the seven financial institutions tax income expenses rose by 53.9 per cent to N80.7 billion from N52 billion tax income expenses reported in prior year.

The figure increased to N88 billion in 2014 but dropped to N71.8 billion and crossed the N100 billion mark to N109.9 billion in 2016. For profit before tax, the seven financial institutions had reported N188 billion in 2011; N477 billion in 2012; N471.6 billion in 2013; N551.8 billion in 2014; N459 billion in 2015 and N497 billion in 2016.

Nigeria banks tax income expenses continued to increase over the years in what analysts attributed to significant increase in profit before tax reported year-on-year.

Financial institutions operating in the country Income tax expense include, Corporate Income Tax (CIT), National Information Technology Agency levy, Education tax and Capital gains tax. As mandated by law, Nigeria companies are charged 30 per cent CIT, based on profit earned in the year preceding assessment.

However, some above banks over the years have continued to default the Education tax and National Information Technology Agency levy (NITDA). Stakeholders in the sector have said government needs to enforce financial institutions taxes compliance, stressing that a lot of loopholes needed to be fine-tuned to bridge the gap tax contribution to Gross Domestic Product (GDP).

The Minister of Finance, Mrs. Kemi Adeosun, had lamented that with a tax to GDP ratio of six per cent, the country is rated one of the lowest in the world. The minister pointed out that the government would require the support of all stakeholders to achieve its objective of increasing non-oil revenue.

The Head of Tax and Regulatory Services at PwC Nigeria and Tax Services, Taiwo Oyedele, in a chat urged the federal government to stop earmarking taxes and enforce compliance as stipulated by the law. According to him, the technology tax is only applicable to specific sectors such as financial services and most companies are complying.

“Also, the level of compliance with education tax is not different from the general level of compliance with other taxes. “Government needs to stop earmark taxes, harmonize existing ones, enforce compliance and utilize tax revenue judiciously. This will encourage more compliance from companies across the country,” he stated.

The Vice President, Chartered Institute of Taxation of Nigeria (CITN), Ms. Gladys Olajumoke, said, “ over the years, the government was much interested in oil income but according to statistics, non-oil income is getting close to oil income.” She questioned Federal government tax income generation contribution to the nation’s economy development.

According to her, the federal government is biting more than they can chew with the introduction of several taxes. “Really, the impacts of tax collected from corporate bodies are not felt from the federal government side. Why is it that we can’t have stable light, standard education and other major facilities?

“It is only few states that are effectively utilizing revenue generated from tax. It is when power returns back to states that ordinary Nigeria will feel the impact of tax. I have not seen the impact of tax income on the economy.” She commended the federal government recently- launched Voluntary Asset and Income Declaration Scheme (VAIDS).

Speaking further, she said, “The amendment of tax law supposed to take place every year. Taxation is a living subject since you wanted to look at the things happening in the economy and use taxation to control it. The last amendment of tax law was in 2011 when government amended personal income tax. It is unfortunate. Now the federal government is looking inward, things can get better. Meanwhile, we are all guilty and that is why am in support of VAIDS.”