Seven banks paid N392.53bn in taxes in first half of 2024
The first half of 2024 saw seven major banks in Nigeria collectively paying a total of N392.53 billion in taxes, as indicated by their second-quarter financial results submitted to the Nigeria Exchange.
These tax payments cover a range of levies such as corporate tax, minimum tax, information technology tax, tertiary education tax, and the Police Trust Fund levy. The Federal Inland Revenue Service specifies that the Company Income Tax is set at 30% of corporate profits, while the value-added tax (VAT) stands at 7.5% and is paid by consumers as a consumption tax.
Guaranty Trust Holdings took the lead as the highest contributor, reporting an income tax expense of N110.90 billion for the first half of the year, marking a substantial 292.5% increase from N28.17 billion in the same period last year.
United Bank for Africa followed with a tax expense of N85.22 billion, an increase of 235.5% from N25.41 billion in 2023. Access Bank’s tax expenses surged by 215.4% to N80.89 billion compared to N25.64 billion in H1 2023, while Zenith Bank reported a tax of N59.59 billion, reflecting a 90% increase from N31.32 billion last year.
Wema Bank recorded a tax expense of N3.97 billion, a 48.1% increase from N2.68 billion in the previous year, and Fidelity Bank reported N44.03 billion, reflecting a 232% increase from N13.23 billion in H1 2023. In contrast, First City Monument Bank saw a decrease in tax obligations, reporting N7.93 billion, down 29% from N11.30 billion in the same period last year.
The Chief Economist and Managing Editor of Proshare, Teslim Shitta-Bey, highlighted the impact of increased taxes on shareholder dividends and retained earnings, which are vital for future investments. He pointed out that while elevated taxes do not directly affect bank operations, they do impact shareholder returns.
Shitta-Bey stated, “When analyzing bank profits, it’s important to recognize that increased taxes won’t necessarily disrupt operations but will influence dividends for investors, who are the primary beneficiaries of significant profits.”
Another financial expert, Rotimi Fakeyejo, described the banks’ profits as “unusual” compared to other sectors facing losses from foreign exchange issues. He observed that the government is leveraging this situation to increase taxes on banks without reducing dividend payouts.
He explained, “Banks are experiencing significant growth this year compared to last, which is why the government decided to increase their tax burden.”
Olaid Baanu, a financial analyst, provided a more optimistic viewpoint, suggesting that the increased tax burden would not significantly harm banks, considering their strong financial performance. He stated, “Banks have reported substantial profits, and I believe they can absorb the tax increases while maintaining strong performance.”
In addition, nigerianwatch reports that multinational companies, including Google, Netflix, and Facebook, contributed N2.55 trillion in taxes to the Federal Government during the first six months of this year.
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