The federal government is targeting that corporate Nigeria will earn a combined gross operating profit of N9.3 trillion in 2024 and from there will be able to generate a company’s income tax revenue of N3 trillion in 2024 up from N1.9 trillion budgeted for 2023.
This was contained in the Medium Term Expenditure framework released by the federal government during the week.
The government also targeted a total of N20.69 trillion in the Net Federal Account revenue pool, which is money divided up between the FG, States, LGA, National Assembly, and Judiciary. (See image below)
However, of note was the government’s N3 trillion plan for corporate taxes which is also expected to grow to N3.3 trillion by 2025 and N3.7 trillion by 2026.
The government claims it derived the N3 trillion by estimating a gross operating profit of N9.3 trillion in 2024 out of which it will tax 30% as company income tax.
This assumes that the government expects corporate profits to keep growing despite harsh economic conditions that have threatened to impact profits from the real sector.
However, data from the first 7 months of the 2023 budget performance indicate the government earned an aggregate revenue of N1.1 trillion from corporate income tax compared to the N544.41 billion target. When annualized this translates to about N2.2 trillion.
It appears the government will be considering the increase in the tax net in addition to the expectation of higher profits.
The government is also projecting a VAT revenue of N3.6 trillion an increase from N2,7 trillion budgeted for 2023. This is based on an increase in consumption expenditure.
Meanwhile, the Chairman, of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele has revealed that the administration of President Bola Tinubu would not impose higher tax rates on Nigerians.
Mr Taiwo said that the objective of the committee is to reduce the number of taxes and levies imposed on Nigerians. He said there is no plan to increase taxes, rather the committee would “harmonise revenue collection” to reduce the tax burden. He said:
President Tinubu during the inauguration of the Presidential Committee on Fiscal Policy and Tax Reforms which Mr. Taiwo Oyedele heads, had tasked the committee to enhance Nigeria’s revenue generation and business environment, as the FG aims to achieve an 18% Tax-to-GDP ratio within 3 years.
