Nigeria’s company income tax (CIT) receipts surged to unprecedented levels in the first half of 2025, generating N4.76 trillion, according to fresh data from the National Bureau of Statistics (NBS).
The figure marks a steep 38 percent rise from the N3.45 trillion collected in the same period last year, raising questions about what is driving the spike, who is paying more, and what it means for the broader economy.
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Domestic Firms Now Carry the Weight
The most striking trend is the shift in the tax base.
Domestic companies have overwhelmingly powered the rise in CIT, with their payments leaping from N646.51 billion in the first quarter to N2.31 trillion in the second quarter — an extraordinary quarter-on-quarter jump of more than 250 percent. Year-on-year, their CIT contribution rose by 71 percent.
This contrasts sharply with the performance of foreign firms, whose payments fell from N1.34 trillion in Q1 to N469.36 billion in Q2, a decline of nearly 65 percent. Year-on-year, foreign company CIT dropped by 58 percent.
The divergence suggests that domestic firms, particularly those in sectors benefiting from currency movements, higher interest earnings, and recapitalisation, are seeing stronger profitability than foreign corporations, many of which remain constrained by forex losses, repatriation challenges, and the high cost of doing business.
The Financial Sector’s Dominance
The financial and insurance sector emerged as the single largest contributor in Q2 2025, paying N1.02 trillion and accounting for 44 percent of all local company income tax in the quarter.
The sector’s CIT rose 166 percent from the N383.57 billion recorded in the same period last year, reflecting the robust earnings tied to banking recapitalisation, rising interest rates, and gains from foreign exchange market reforms.
Manufacturing and mining followed at a distance, paying N360.20 billion and N212.27 billion, respectively. Both sectors posted solid year-on-year growth — 62 percent for manufacturing and 24 percent for mining and quarrying — showing that despite inflationary pressures and high energy costs, parts of the real sector are recording profitable activity.
What the Numbers Tell Us About the Economy
The rise in CIT signals a complex mix of economic realities. On one hand, it reflects improved profitability for segments of the domestic private sector, particularly finance, which continues to benefit from the current monetary environment. It also suggests enhanced compliance or the impact of more aggressive tax administration.
However, the sharp decline in foreign company contributions raises concerns about the operating climate for international firms. The slump may indicate dwindling foreign investment, persistent currency challenges, or shrinking profit margins among multinationals still grappling with economic instability.
Ultimately, the record-high CIT collections point to a tax system increasingly reliant on domestic players who are navigating and capitalising on government reforms.
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But the contrasting fortunes of local and foreign firms also highlight structural imbalances that governments at state and federal levels may need to confront if Nigeria hopes to build a more diversified and investment-friendly economy.
Philip Ibitoye is a Special Correspondent with EKO HOT BLOG. Click here to find daily analysis and critical insight on trending issues in Lagos and other parts of Nigeria.
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