Business

Nigeria to introduce new rules to stop tax evasion, increase in VAT underway

Published

10 years ago

August 10, 2015

By Omoh Gabriel
Chairman Federal Inland Revenue service Mr. Sunday Ogungbesan weekend said the federal government is considering a review of Value Added Tax with a possible increase from 5-10 per cent. He said that FIRS is at the moment engaging stakeholders to sensitise the nation on the possibility of increase in VAT as the quick win for revenue generation for the country saying that with dwindling crude oil revenue the government expects to fill the gap with non oil revenue.
He said that the service is collaborating with the Central Bank of Nigeria to capture the revenue flow of companies and individual and that very soon it will be difficult for resident in Nigeria to operate an account without a Tax Identification Number.
Meanwhile President Muhammadu Buhari has urged Nigerians to stop paying mere lip service to agriculture, as crude oil and gas exports will no longer be sufficient as the country’s major revenue earner. The president gave the charge at an audience he granted Dr Kanayo Nwanze, the Nigerian born President of the International Fund for Agricultural Development (IFAD), at the Presidential Villa, Abuja.
“It’s time to go back to the land. We must face the reality that the petroleum we had depended on for so long will no longer suffice. We campaigned heavily on agriculture, and we are ready to assist as those who want to go into agricultural ventures,’’ he said.
Buhari pledged that his administration would also cut short the long bureaucratic processes that Nigerian farmers had to go through to get any form of assistance from government. He told the IFAD President that improvement of the productivity of farmers, dry season farming and creative ways to combat the shrinking of the Lake Chad will also receive the attention of his administration.
“There is so much to be done. We will try and articulate a programme and consult organisations like IFAD for advice,’’ he added. According to the president, foreign exchange will be conserved for machinery and other items needed for production “instead of using it to import things like toothpicks’’. Nwanze had earlier congratulated Buhari on his victory at the general elections and assured him that IFAD was ready to give all possible assistance to the Federal Government and Nigerian farmers to boost agricultural production in the country. Nwanze, who later spoke to State House correspondents, said IFAD had since 1985 been providing loans and grants in the nation’s agricultural sector to boost agricultural production.
“Nigeria has the largest portfolio of IFAD’s investment in Western and Central Africa and the second largest in Africa. But the case point here is that this country has all the endowments that it takes not only for it to produce enough food for its population but also to be the bread basket of region. And this is where my institution on my behalf, I offered our services and our support in the agenda of rural transformation as a key ingrate in this country’s economic and social development,’’ he said
The FIRS Chairman speaking on how to boost non oil revenue said that it would crack down on tax evaders by denying access to banking facilities for individuals and companies that failed to join its register. FIRS chairman told journalist in a news briefing in Lagos there were more than 450,000 companies in the country, but only about 125,000 pay any form of tax.
Ogungbesan said it was difficult to track the financial activities of those who did not pay taxes, most of whom said their firms were not active.
“We are collaborating with the central bank to enforce compulsory registration with the tax authority by companies and individuals before they can access their bank accounts,” said Ogungbesan.
Tax identification numbers were introduced for corporate bank accounts in 2012 but some firms whose accounts pre-date the system are currently not obliged to have one.
“There is a need to review our tax laws,” said Ogungbesan, adding they were not stringent enough to deter evaders. Tax evasion can be punished with up to five years in prison.
According to him the service was given a revenue generation target of N4.5 trillion in 2015 and has so far N2.667 trillion. He said that the estimated collection for July, 2015 is N404billion. This he said is 106 per cent of the monthly target of N381.02 and brings total collection to date up to N2,374.18 billion against the target of N2,667.13bn and improves collection percentage to 89 per cent. He said that the target for VAT was N1.283 trillion and the service has so far been able to generate N390.36 billion as VAT into the federation account. He said the target was set with the hope that as from July the VAT rate will rise to 10 per cent.
Ogungbesan said “Oil has not been doing well, government expects the non oil sector to provide the relief being sought, governance must continue, this is paramount in the minds of every one. If we can not pay salaries, it is a big problem for the country; my record shows that we have 450,000 corporate entities in this country, how many of them are contributing taxes, into the coffers of government, only about 125, 000. So the rest 300, 000 plus where are they, you can not find them they are portmanteau companies. The law says if you are registered within six months you must commence business.
“The same law which said you must commence business has not provided the infrastructure upon which you can rest. If a company is registered and stays for years without doing business and become operational ten to fifteen year later it will be required to pay return charge fee of N25, 000 for each of the year it did not operate as penalty. This kind of law does not promote investment.
“There is the need to intervene, and amend the complex laws that inhibit interest in promoting investment in the country. All those in the informal sector are not paying taxes it is only those in formal employment that are paying taxes. Can this be true? When the local government comes to the market to allocate stores, the woman in the store pays 2, 000 per month is that not tax she is paying? All those sundry levies being collected by states, they have more than sixty levies on these businesses what do you call that? They are taxation in one form or another.
“It is true they are not paying adequate taxes, some body that should be paying N60, 000 is giving you N2, 500. The limitation and the challenges we have is that we do not know who these tax payers are and where they are operating from. The fact is that the federal Inland Revenue service which every one is quick to refer to is only administering the Federal Capital Territory, not the entire country and so that makes it difficult for us.
When we compute tax to GDP ratio, every now and then you hear Nigeria is doing only about 7.5 per cent, whereas other countries in Africa countries are reporting about 19 per cent.
“Yes they are partially correct but they forget that the various levies at the local government level, at the state level, including the personal income taxation administered by the state governments if you include them in the tax figure, Nigeria will be doing close to 17.5 per cent. It is still not enough because the bench mark is 20-22 per cent. We are not accessing ourselves correctly.
“The quick win is why not increase the rate of VAT from 5-10 per cent. Can we do it now, If you see how far we have gone you will see that VAT would have increased by July that is the target they gave us but we have not been able to do it, we are consulting as we speak to you we will also speak to the Academic community, the students also want to know, we will speak to labour, government want it done.
I will tell you first and foremost we in Nigeria do not pay the classical vat, the classical vat which anyone may settle for, the first is the income vat, is just a matter of taking all the incomes of production and solve them into mathematics and then the value such as income, labour, entrepreneurial, the increase in these element from the previous year record is value added. This can be conveniently calculated with proper records and book keeping he said. He said that Nigeria needed to adopt a central tax payment. He said there are a lot of benefits in this type of tax collection system that will enhance the revenue generation of the different arms of government in Nigeria. He also said that collaboration will go a long way in non oil revenue drive of the country.
“We are collaborating with all the banks to ensure that even individuals without TIN cannot do businesses with the banks. So what is the idea of this centralisation of tax system, is about helping them to collect, not keeping the revenue, because the constitution says every state shall keep its revenue, but the constitution did not say each state shall collect its own revenue, it is easier if I can have an MOU so that we can help them do the collection. We have the staff; FIRS have six thousand workforces, check it out with any of the states” he said.

Business

FG earned N2.78trn from Company Income Tax in second quarter 2025—NBS

Published

1 week ago

November 28, 2025

Business News Report

National Bureau of Statistics has said that Nigeria’s Company Income Tax rose sharply in the second quarter of 2025, hitting N2.78 trillion.

The figure represents a significant 40.27 per cent increase compared to the N1.98 trillion recorded in the first quarter of the year, reflecting both improved tax compliance and stronger corporate performance across key economic sectors.

The NBS report said that domestic company income tax payments accounted for the bulk of the revenue, contributing N2.31 trillion, while offshore collections stood at N469.36 billion during the period under review.

According to the NBS, the financial and insurance sector recorded the highest quarter-on-quarter growth, rising by an astonishing 772.29 per cent, driven by improved profitability among banks, fintechs, and insurance firms following robust half-year earnings.

This, according to NBS, was followed by wholesale and retail trade, as well as motor vehicle repair activities, which grew by 538.38%.

Activities of households as employers also surged by 526.79%, although their overall contribution to total company income tax remained negligible.

On the flip side, some sectors experienced sharp declines in company income tax remittances.

Activities of extraterritorial organizations and bodies dropped by –45.01%, while education, public administration, defence, and compulsory social security recorded declines of –26.61% and –18.17% respectively.

The contraction in these sectors, particularly education and public administration, highlights persistent structural and fiscal challenges confronting government-funded institutions.

In terms of contribution to total tax revenue, financial and insurance activities led with a dominant 44.13%, reflecting the sector’s continuing expansion and strong capital flows.

Manufacturing followed with 15.57%, bolstered by increased production output and improved supply chain activity.

Mining and quarrying ranked third, contributing 9.18%, supported by higher commodity prices and renewed interest in solid mineral development.

At the bottom of the contribution chart were activities of households as employers, which accounted for just 0.01%, as well as activities of extraterritorial organizations and bodies, and water supply, sewerage, waste management, and remediation services, each contributing 0.04%. Despite economic headwinds, year-on-year company income tax collection still rose by 12.66% when compared to Q2 2024, underscoring moderate but steady improvement in government revenue mobilisation.

Company income tax collection in the same period of 2024 rose by 150.83 per cent N2.47 trillion. In the first three months of the year, company income tax collection stood at N984.61 billion. According to the report, local payments in the period under review amounted to N1.35 trillion, while foreign CIT payments contributed N1.12 trillion. On a quarter-on-quarter basis, the agriculture, forestry, and fishing sectors exhibited the highest growth rate at 474.50%, followed by financial and insurance activities at 429.76%, and manufacturing at 414.15%.

Business

Lagos govt promises MSMEs continued visibility, market access

Published

3 weeks ago

November 16, 2025

Business News Report

Lagos State government has reaffirmed its unwavering commitment to supporting micro, small, and medium enterprises (MSMEs) across the state through visibility, capacity building, and market access. Commissioner for Commerce, Cooperatives, Trade, and Investment, Folashade Ambrose-Medebem, made the pledge on Sunday at the closing ceremony of the 2025 Lagos International Trade Fair (LITF). The 38th edition of the event, organised by the Lagos Chamber of Commerce and Industry (LCCI), had its theme as “Connecting Business, Creating Value.”

Ms Ambrose-Medebem said every entrepreneur, regardless of scale, deserves an enabling environment to thrive and contribute meaningfully to the state’s economic prosperity. She said the state, through strategic investments in infrastructure, institutional reforms, and continuous engagement with the private sector, was building a Lagos that worked for business. The commissioner added that the state would continue to foster innovation, competitiveness, and sustainability.

“As a government, we remain steadfast in our commitment to making Lagos the preferred destination for commerce and enterprise. This fair has once again demonstrated the power of connection: connection between producers and consumers, investors and innovators, the government and the private sector, and local entrepreneurs and global brands. Every handshake, every conversation, every business card exchanged here is a building block toward the future we are creating, a future of prosperity that leaves no one behind,” she said.

The commissioner urged businesses to continue to connect, collaborate, and create value, saying, “In Lagos, we do not just trade goods; we trade ideas, build futures, and transform lives. “Together, let us continue to make Lagos not just a place of commerce, but a symbol of progress, innovation, and endless opportunity.” Gabriel Idahosa, president of LCCI, urged governments at all levels to continue addressing the issues of creating an enabling environment in the country.Mr Idahosa said focus should be on infrastructure, security, and implementing the right policies to address the key drivers of high inflation.

This, he said, was needed to fully harness the vast enterprising resources of domestic and foreign investors for the diversification of our economy and the welfare of our people. He pledged the commitment of the organised private sector to stand solidly behind the state in its quest to actualise its innovative initiatives on all fronts. NAN

Business

Jumia posts $17.7m pre-tax loss in Q3, down 1% in 12 Months

Published

3 weeks ago

November 12, 2025

Business News Report

Jumia Technologies AG posts a $17.7 million loss before income tax in the third quarter of 2025, down 1% year-on-year from $17.8 million in the third quarter of 2024. The road to profitability has remained long as ecommerce continues to face uncertainties, including widening competition with rivals in the same industry. The e-commerce company revenue came in at $45.6 million compared to $36.4 million in the third quarter of 2024, representing a 25% year-over-year surge in the period. The company reported gross merchandise value of $197.2 million compared to $162.9 million in the third quarter of 2024, up 21% year-over-year. Excluding South Africa and Tunisia, physical goods GMV grew 26% year-over-year, Jumia revealed in the unaudited financials.

Jumia said in its report that the GMV growth was driven by supply and strong marketing execution, partially offset by lower corporate sales in Egypt. Excluding corporate sales, GMV in reported currency grew 37% year-over-year. Nigeria’s momentum accelerated, with order growth up 30% and GMV up 43% year-over-year, Jumia said. The e-commerce giant’s operating loss reduced by 13% year-over-year to $17.4 million compared to $20.1 million in the third quarter of 2024. The company’s adjusted earnings before interest tax depreciation and amortisation loss dropped by 17% to $14.0 million compared to $17.0 million in the third quarter of 2024.

Jumia reported a loss before income tax of $17.7 million, a slight reduction of 1% compared to $17.8 million in the third quarter of 2024. Liquidity printed at $82.5 million, a decrease of $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included the net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.

Its net cash flow used in operating activities settled at $12.4 million compared to net cash flow used in operating activities of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million.

Jumia reported that customers’ orders grew 34% year-over-year, driven by strong execution, enhanced product assortment, and healthy consumer demand across key categories. It said quarterly active customers ordering physical goods grew by 23% year-over-year, highlighting continued engagement and customer loyalty. As of September 30, 2025, the Company’s liquidity position was $82.5 million, comprised of $81.5 million in cash and cash equivalents and $1.0 million in term deposits and other financial assets, it said in the report Jumia’s liquidity position decreased by $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.

Net cash used in operating activities was $12.4 million in the third quarter of 2025, compared to a net cash used of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million in the third quarter of 2025, compared to a negative working capital contribution of $9.1 million in the third quarter of 2024, primarily reflecting improvements in operating performance.

In addition, the Company reported $1.4 million in capital expenditures in the third quarter of 2025, compared to $0.9 million in the third quarter of 2024, primarily reflecting investments in infrastructure and facility enhancements to support business growth. “This quarter marks a significant acceleration in customer demand and order growth, driven by strong execution across our markets and growing consumer trust in the Jumia brand. We believe Jumia has reached an inflection point as our compelling value proposition, and improved operational discipline position us for sustainable, profitable growth.

“We continue to strengthen our cost structure and sharpen operational discipline, reinforcing our path toward profitability. Our focus remains on execution and customer engagement as we build a more efficient business.
“We believe that we are on track to reach breakeven on a Loss before Income tax basis in Q4 2026 and achieve full-year profitability in 2027, positioning Jumia for long-term growth and value creation.”