N392bn Tax Payment Recorded By Seven Major Banks

N392bn Tax Payment Recorded By Seven Major BanksSeven banks paid a total of N392.53 billion in taxes during the first half of 2024, according to an analysis of their second-quarter financial reports filed with the Nigeria Exchange for the period ending June 30. The tax expenses incurred by these banks included various levies such as corporate tax, minimum tax, information technology tax, tertiary education tax, and the Police Trust Fund levy.....KINDLY READ THE FULL STORY HERE▶

The Federal Inland Revenue Service noted that the Company Income Tax is set at 30% on companies’ profits, while the Value Added Tax (VAT) stands at 7.5%, which is borne by consumers at the point of purchase.

Guaranty Trust Holdings topped the list with an income tax expense of N110.90 billion for the first half of the year, marking a staggering 292.5% increase from N28.17 billion in the same period in 2023. The United Bank for Africa followed closely with a tax expense of N85.22 billion, a rise of 235.5% from N25.41 billion last year.

Access Bank reported tax expenses of N80.89 billion, reflecting a 215.4% increase compared to N25.64 billion in H1 2023. Zenith Bank’s tax obligation was N59.59 billion, a 90% increase from N31.32 billion in the previous year. Meanwhile, Wema Bank reported a tax expense of N3.97 billion, up 48.1% from N7.38 billion last year, and Fidelity Bank recorded N44.03 billion, a 232% increase from N13.23 billion in H1 2023. Conversely, First City Monument Bank’s tax obligation decreased by 29% to N7.93 billion from N11.30 billion in H1 2023.

Teslim Shitta-Bey, Chief Economist and Managing Editor of Proshare, pointed out the need to balance profits and dividends. He noted that while increased taxes may not directly impact bank operations, they can influence shareholder dividends and retained earnings, which are essential for future investments. “If a bank generates significant profits, the primary beneficiaries are the investors, as they receive dividends,” he explained.

Financial expert Rotimi Fakeyejo referred to the banks’ earnings as “unusual profit,” especially in contrast to other sectors that are struggling due to foreign exchange challenges. He indicated that the government has taken advantage of this situation to increase taxes on banks without diminishing dividend payouts or returns for shareholders. “The performance of banks this year shows a significant leap compared to last year,” he added.

Analyst Olaid Baanu expressed a more positive view, suggesting that the increased tax burden would not severely impact the banks. He argued that their ongoing profitability allows them to absorb higher taxes while maintaining strong financial performance. “The increased tax burden won’t affect the banks significantly because many have reported substantial profits. This is also a good source of income for the government,” he stated.

In related news, multinational corporations such as Google, Netflix, and Facebook contributed N2.55 trillion in taxes to the Federal Government in the first six months of this year.

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