Nigeria Sets Ambitious Targets for Corporate Tax Revenue in 2024
The federal government is setting its sights on corporate Nigeria, aiming for a collective gross operating profit of N9.3 trillion by 2024, with the hope of generating N3 trillion in company income tax revenue, a substantial leap from the N1.9 trillion budgeted for 2023.
In the Medium Term Expenditure Framework recently released, the government laid out its objectives, projecting a total of N20.69 trillion in the Net Federal Account revenue pool, which includes allocations to the federal, state, and local governments, as well as the National Assembly and Judiciary.
Of particular interest is the government’s plan to amass N3 trillion in corporate taxes, with expectations of growth to N3.3 trillion by 2025 and N3.7 trillion by 2026.
The government’s methodology for reaching the N3 trillion figure is based on estimated nominal GDP, Companies’ Profitability Ratio, and an anticipated improvement in tax collection efficiency.
This projection assumes that corporate profits will continue to grow, even amid challenging economic conditions.
Nonetheless, recent data from the first seven months of the 2023 budget performance reveal that the government has earned an aggregate revenue of N1.1 trillion from corporate income tax, which is significantly lower than the N544.41 billion target when annualised.
It appears the government is banking on expanding the tax net in addition to higher anticipated profits to achieve these lofty goals.
Additionally, the government has set its sights on a VAT revenue of N3.6 trillion, up from the N2.7 trillion budgeted for 2023, driven by an increase in consumption expenditure.
To meet these ambitious targets, more VAT payers are expected to be added to the tax net with the effective implementation of various provisions from the Finance Acts.
Notably, while the government seeks to maximise revenue collection, it’s reassuring that the administration under President Bola Tinubu is not looking to impose higher tax rates on Nigerians.
The aim of the Presidential Committee on Fiscal Policy and Tax Reforms is to reduce the number of taxes and levies, thereby easing the tax burden for people and businesses and enhancing the overall business environment.
So, while the government’s tax expectations are high, it’s clear that they’re working towards achieving them without imposing additional burdens on the populace.
Source: Nairametrics
