A total of 14 commercial banks listed on the Nigerian Stock Exchange are billed to pay N103bn in taxes to the Federal Inland Revenue Service for the 2018 financial year.
An analysis of the recent financial statements filed by the banks on the NSE showed that Ecobank Transnational Incorporated will pay the highest amount of N33.61bn. A breakdown of the amount revealed that the tax liability was originally N35.076bn, but a deferred tax asset of N1.46bn was deducted from the amount.
Guaranty Trust Bank Plc has the second highest tax liability of N30.85bn, followed by United Bank for Africa Plc, which reported a tax liability of N14.30bn. UBA listed its tax components to include N8.98bn current tax, and N550m Information Technology tax and a deferred tax of N5.32m.
Stanbic IBTC Bank Plc reported a tax liability of N13.712bn, followed by Zenith Bank Plc, which is to pay N4.052bn minimum tax. An analysis of the financial statement of Zenith Bank showed that the bank had a total tax liability of N26.63bn, but was assessed based on the minimum tax rule because of a significant non-taxable income that resulted in a taxable loss for the bank. Zenith Bank said included in the total tax amount was N18.04bn dividend tax for 2018 financial year, but it was liable to dividend tax of N25.43bn, which represented 30 per cent of the N84.77bn dividend paid as the Nigerian tax laws required companies to pay tax calculated at 30 per cent of the higher of taxable profit and dividend paid.
However, the total Company Income Tax payable based on minimum tax was N4.35bn as the bank had tax paid in the prior year and tax credits amounting to N3.04bn. The difference between income tax payable assessed on dividend and income tax payable assessed on minimum tax amounted to N18.04bn, which was charged as tax expense during the period.
Fidelity Bank Plc has a tax liability of N2.16bn, made up of a current tax of N1.91bn and IT tax of N251m. Access Bank Plc reported a tax payable of N1.65bn, which comprised CIT of N4.37bn, IT tax of N752.4m and Capital Gains Tax of N17.8m, after which a deferred tax of N63.49bn was deducted.
Wema Bank Plc is billed to pay a tax of N1.47bn for the 2018 financial year, which can further be grouped into CIT of N351.8m, National Information Technology Development Agency tax of N56.06m, and a deferred tax of N1.063bn.
Sterling Bank Plc reported a tax of N271m for the period, saying it paid N710m during the year. It had a tax balance brought forward of N232m, a current tax charge of N173m, CIT of N173m and IT tax of N98m. Sterling Bank said the basis of its income tax for 2018 was 30 per cent of N575.808m, which was the value of the dividend paid to shareholders in 2018 and relating to the 2017 financial year. It added that it was not liable to pay CIT in 2017 as it did not have any taxable profit. It also did not pay any dividend in 2017 and had more than 25 per cent imported capital as at the reporting date, which made the bank got an exemption from minimum tax as stated in Section 33(3) of the Company Income Tax Act as amended 2007.
According to the bank’s financial report, an un-utilised capital allowance of N42.206tn and unused tax losses carried forward and available at N46.813tn were recorded. It said it had deductible temporary differences of N86.33tn to be offset against future taxable profits. However, no deferred tax asset was recognised in respect of the items due to uncertainties regarding the timing and amount of future taxable profits.
First City Monument Bank Plc reported a tax liability of N123.3m, made up of N107.1m of dividend tax and N16.2m income tax. The bank said it was assessed based on the minimum tax legislation for the year ended December 31, 2018 because of a tax exemption granted via CIT (Exemption of Bonds and Short-Term Government Securities) Order, 2011 as contained in a gazette issued by the President of the Federal Republic of Nigeria, which took effect from January 2, 2012. It said all the provisions of the CITA that mandated a minimum tax assessment, where a taxpayer did not have any tax liability arising from its tax assessment, were applied.
As of the time of collating the results, Diamond Bank Plc, First Bank of Nigeria Limited, Union Bank Plc and Unity Bank Plc had yet to file their 2018 financial statements, so, their financial statements for the nine-months period ended September 30, 2018, were used. Diamond Bank reported a tax of N398.4m, Union Bank reported N164m, Unity Bank reported N57.94m and First Bank reported N38m. Union Bank said it was not liable to pay income tax as it recorded a tax loss for the period. It said it was exempted from paying minimum tax under the Act as it had imported share capital of over 25 per cent. No education tax was charged because the bank has no assessable profit for the period.
The Head, Economic Research and Policy Management, Securities and Exchange Commission, Mr Afolabi Olowookere, said of the N5.8tn realised by the FIRS in 2018, listed companies contributed about 60 per cent of the value. He urged exchanges, capital market operators and the Federal Government to work together to increase listing of companies on the stock market, not only for revenue generation but other benefits as well.
The Vice-President, Association of Stockbroking Houses of Nigeria, Mr Akinsola Akeredolu-Ale, said most companies that were reluctant to come to the stock market were hiding their financials or were scared of take-over by wealthy Nigerians. He said, “Once the government can work together with the FIRS to enforce tax laws, there would be no hiding place for companies. Thus, they will be forced to come to the market.”
A Professor of Economics at the University of Nigeria, Nsukka, Hyacinth Ichoku, said the Corporate Affairs Commission should also be involved in the tax generation process. According to him, the collaboration of the FIRS, Federal Government and the CAC will improve and increase internally-generated revenue for the government. He said, “There are a lot of unregistered companies that are making so much money and not paying taxes. When the CAC can tackle this issue, they will be forced to pay taxes. “Also, the CAC should simplify the registration requirements for companies to attract them. It should also do a lot of enlightenment for them, after which it can apply appropriate sanctions to defaulting companies.” Ichoku urged the government to reduce its concentration on Petroleum Profit Tax and increase its concentration on CIT.