With Covid-19 Pandemic still raging, it’s becoming mission impossible for the Federal Government to achieve the 2020 budget Company Income Tax projection of N1.79trillion as 17.3% shortfall amounting to N235 billion has been recorded for the third quarter of the just concluded year, Q3’2020.
This development is coming against the backdrop of the need for the Federal Government to rake in more revenue in other to cushion the effect of current economic realities and to fund more growth projects. Data from the National Bureau of Statistics, NBS, has it that actual CIT revenue realized for the period under review was N1.113 trillion.
Experts have it that the shortfall is not unexpected due to the global health crisis which led to a nationwide lockdown during the period under review and a sharp drop in oil revenue. According to further analysis, another shortfall in CIT is expected in the fourth quarter, Q4’20.
Recall that CIT projection as of the first-half of 2020 was already down by N227billion.
Reaction continue to trail continued drop in the Federal Government’s 2020 budget Company Income Tax projection of N1.79trillion with the latest been 17.3% amounting to N235 billion drop as of third quarter 2020, Q3’2020.
This downward trend is coming against the backdrop of the need for the Federal Government to rake in more revenue in other to cushion the effect of current economic realities and to fund more growth projects. Data from National Bureau of Statistics, NBS, has it that actual CIT revenue realised for the period under review was N1.113 trillion.
In his reaction, Uche Uwaleke, a Financial Economist and Professor of Capital Market at the Nasarawa State University said: “One doesn’t need to look far to see the cause of the shortfall in the CIT collection. COVID’19 is to be blamed with supply chains disruptions and lockdowns that accompanied it which negatively affected most companies’ revenue and bottom lines.
‘‘Don’t forget also that the Collecting Agency, the Federal Inland Revenue Authority, FIRS, as part of COVID’19 response measures, granted extensions to companies with respect to filing tax returns.”
Commenting as well, Mr Victor Chiazor, Analyst and Head of Investment at Fidelity Securities Limited, said: “The tax revenue projection by the government for 2020 was quite ambitious despite the fact that the country had a lot of companies outside the tax net.
‘‘Its half year tax shortfall of N227 billion was much better than we projected as we expected a much higher shortfall owing to the economic lockdown and relatively slow economic activity triggered by the pandemic during the period in question.”
Reacting as well, Mr Sola Oni, Chartered Stockbroker and Chief Executive Officer, Sofunix Investment and Communications said: “A company’s income tax is a function of profitability. It is obvious that companies’ earnings will be reduced by the impacts of Covid-19 pandemic on business activities. Therefore, the shortfall of N227 billion in companies’ income tax of first half of 2020 is not unexpected.
“It is significant that 63 quoted companies accounted for 30.4 per cent generated income tax by the government. This symbolizes one of the benefits of listing companies on the Nigerian Stock Exchange. A quoted company cannot evade tax as it must perform its corporate responsibilities and there is nowhere to hide.”