Seplat, Dangote Cement, Others’ Tax Payment to Revenue Agencies Tripled to N1.01trn in 2024

Kayode Tokede 

Seplat Energy Plc, and 15 other companies tax payment to Federal Inland Revenue Service (FIRS) and other revenue collecting agencies in Nigeria, other African countries tripled to N1.01 trillion in 2024, amid significant increase in revenue generation by listed companies on the Nigerian Exchange Limited (NGX).

The N1.01 trillion tax payment is about 191.3 per cent increase over N345.15 billion reported in the 2023 financial year. 

Despite challenges and reforms in Nigeria’s economy, most of these companies were able to grow their revenue. 

In Nigeria, companies are required by law to remit tax income to state, federal government agencies, among other agencies where they operate.

The FIRS is Nigeria’s agency responsible for assessing, collecting and accounting for tax and other revenues accruing to the Federal Government of Nigeria.

Aside from paying the statutory rate of 30 per cent of total profit as the company’s income tax, companies operating in Nigeria are meant to pay Tertiary Education Tax, National Information Technology Development Agency (NITDA) Tax and Nigeria Police Trust Fund Levy.

The tertiary education tax is imposed on every Nigerian company at the rate of 2.5 per cent of the assessable profit for each year of assessment, while the Act that established the Nigeria Police Trust Fund was meant to receive funds from a levy of 0.005 per cent of the net profit of companies operating a business in Nigeria and other various sources, which is utilised for the training and welfare of personnel of the Nigeria Police Force.

Analysis of the companies’ 2024 result and accounts posted on NGX, showed that Seplat Energy Plc paid the highest tax of all listed companies, followed by Dangote Cement Plc and MTN Nigeria Communication Plc. 

In its latest result and accounts,  Seplat which is listed on both the Nigerian Exchange and the London Stock Exchange (LSE) declared N347.18 billion tax expenses IN 2024, about 685 per cent increase over N44.21 billion reported in 2023. 

The company in the 2024 result and accounts said, “The Income tax expense is recognised based on management’s estimate of the weighted average effective annual income tax rate expected for  the full financial year.”

According to Seplat Energy, the annual tax rate used for the year ended 2024FY  is 85per cent for crude oil activities and 30per cent  for gas activities. 

“As  at 31 December 2023, the applicable tax rate was 85per cent and 30per cent respectively.  The effective tax rate for the period was 62per cent (2023: 35per cent),” the company added. 

Seplat Energy  in the last five years has paid a sum of N459.62 billion as tax to government agencies, among others. 

Dangote Cement in the year under review paid N229.29 billion as tax to revenue generating agencies, about 135per cent increase  over N97.5 billion reported in 2023.

The cement maker in its results disclosed that, “The income tax rate of 30per cent was used for the company income tax computation as established by the tax legislation of Nigeria effective in 2024 and 2023. 

“Among others, the income tax rate in South Africa is 28 per cent, in Congo, 28 per cent, in Cameroon, 38.5 per cent, 25 per cent in Ghana, 25 per cent in Sierra Leone and 30 per cent in Zambia.”

Recently, Dangote Industries Limited, (Dangote Group), and its subsidiaries disclosed that it paid over N402.32 billion in taxes in 2024, making it the highest taxpayer in the country.

Dangote Industries Limited (DIL) and its subsidiaries, namely:  Dangote Cement, NASCON, Dangote Packaging Limited among others, remitted a total of N402.32 billion for the out-gone year as taxes as responsible business enterprises.

Chief Branding and Communication Officer, Dangote Group,  Mr. Anthony Chiejina had explained that DIL and its subsidiaries have never shied away from its obligations either to the government in the form of tax payment at all levels or to host communities in the form of Corporate Social Responsibility (CSR).

According to him, the Group’s corporate strategy has evolved just as its businesses have grown, matured and diversified into new sectors and regions over the last four decades, noting that Dangote Group has almost single-handedly taken Nigeria to self-sufficiency in cement and refined petroleum products and is expanding rapidly across Africa.

In addition, MTN Nigeria’s tax expenses stood at N149.89 billion in 2024, representing an increase of 266.79 per cent from  N40.87 billion in 2023.  

The recent tax reforms in Nigeria include several significant bills introduced by President Bola Ahmed Tinubu in October 2024, aimed at overhauling the country’s tax system. 

Part of the key components of these reforms include: The Nigeria Tax Bill 2024, which seeks to harmonize major taxes such as corporate income tax, personal income tax, and value-added tax; the Tax Reform Bill, which aims to enhance revenue generation by addressing gaps in current tax regulations and is expected to impact businesses and individuals significantly.

Additional bills include the Tax Administration Bill and the Nigeria Revenue Service Establishment Bill, which aim to provide a clearer legal framework for tax administration.

Notably, the value-added tax (VAT) rate was retained at 7.5per cent, despite earlier proposals to increase it to 15per cent.

The House of Representatives passed four tax reform bills that were initially proposed in October 2024.

The reforms have sparked debates, with opposition from various groups, including the Northern Nigeria Governors’ Forum, over certain provisions like the VAT derivation model

These reforms aim to simplify Nigeria’s tax system, enhance government revenue, and streamline tax collection processes.

Commenting, Investment Banker and Stockbroker, Mr. Tajudeen Olayinka stated that listed companies over the years have maintained stronger profit, which is meant to contribute to government tax revenue.

He expressed that most companies that were reluctant to come to the stock market were hiding their financials or were scared of take-over by wealthy Nigerians.

He said: “Once the government can work together with the FIRS to enforce tax laws, there would be no hiding place for companies. Thus, they will be forced to come to the market.”

The MD/CEO, Globalview Capital Limited, Mr. Aruna Kebira in a chat withTHISDAY explained that the role of tax in fiscal policy in the country cannot be overemphasised. 

According to him, listed companies on the Exchange, as public limited companies, are expected to pay 30per cent income tax to the government. 

“This is deductible from their profit before tax that runs into trillion of Naira. Payment of such to the government is a sure annual revenue generation avenue and would go a long way in financial government expenditure,” he added.