Six of Nigeria’s biggest banks paid a total of N131.45 billion as income tax for the financial year ended December 31, 2017, an analysis by New Telegraph has shown.
The banks are Guaranty Trust Bank (GTB), Zenith Bank, United Bank for Africa (UBA), Ecobank Transnational Incorporated (ETI), Access Bank and Stanbic IBTC.
Details of the results showed that the banks paid government a total of N131.45 billion as income tax from the profit they posted for the year. The amount is 5.6 per cent above the N124.12 billion paid in 2016.
A breakdown of the tax payment showed that GTBank Plc paid the highest of N29.77 billion, followed by UBA, which paid N26.67 billion and Zenith Bank Plc with N25.52 billion. Ecobank Transnational Incorporated paid N18.61 billion while Access Bank Plc and Stanbic IBTC paid N18.08 billion and N12.88 billion respectively.
This amount is N5.84 billion or about 4.1 per cent below the N137.29 billion that all the deposit money banks (DMBs) in the country reported as total taxes for the financial year 2016. Major lenders such as First Bank of Nigeria Limited, Fidelity Bank and Diamond Bank are yet to publish their 2017 full year financial statements.
Further analysis showed that compared with the taxes they paid in 2016, UBA recorded the highest increase as it paid N26.65 billion in 2017 as against N18.38 billion it paid as tax in the previous year. The Tier 1 lender was followed by Stanbic IBTC which reported an increase in the tax it paid from N8.69 billion in 2016 to N12.79 billion last year.
Other Tier 1 banks like GTB, Zenith and Access reported that they paid less profit in 2017 compared with what they contributed to government in the previous year.
Specifically, although GTB still seems to have paid the highest tax of N29.77 billion this year, this figure is below the N32.86 billion it paid in 2016. Also, Zenith Bank paid N25.52 billion as tax this year, which is less than the N27.09 billion it paid in 2016.
Similarly, Access Bank reported a slightly lower tax payment of N18.08 billion this year as against the N18.90 billion the lender reported in the previous year.
Interestingly, findings by New Telegraph revealed that the total amount of N137.29 billion that DMBs in the country reported as tax for the financial year 2016 represents a 43 per cent increase from the N95.8 billion that they paid in 2015.
Analysts point out that Nigerian lenders reported total pre-tax profits of about N578 billion for the year ended December 2016. This compares to a pre-tax profit of N529 billion in 2015.
New Telegraph had, last week, reported that despite grappling with economic headwinds for most of the year, banks like Zenith, GTB, UBA, ETI and Stanbic IBTC reported a rise in their 2017 profit after tax (PAT) compared with their performance in 2016.
For instance, Zenith Bank Plc’s full year 2017 PAT grew by 37.24 per cent to N177.933 billion from N129.652 billion recorded a year earlier. Guaranty Trust Bank Plc. reported a PAT of N170.470 billion for 2017 as against N132.281 billion posted in 2016, accounting for a growth of 28.87 per cent. UBA posted a PAT of N78.590 billion last year as against N72.264 billion recorded in 2016, accounting for a growth of 8.82 per cent.
Ecobank Transnational Incorporated (ETI) Plc’s full year 2017 PAT jumped to N70 billion from a loss of N33.71 billion recorded in 2016 while Stanbic IBTC reported a PAT of N48.381 billion, representing a 69.64 per cent growth over the N28.520 billion recorded in the previous year.
Analysts predict that with the improving business environment triggered by rising oil prices as well as the country’s exit from recession, Nigeria banks, especially the big lenders, will continue to report an increase in profit before tax in the coming years.
This could ensure steady revenue for government in form of income tax paid by banks.
Nigeria has a corporate tax rate of 30 per cent and given widespread concern over the country’s reliance on oil revenue, there have been calls for government to ensure tax compliance by companies. The Minister of Finance, Mrs. Kemi Adeosun, consistently points out that Nigeria’s tax to Gross Domestic Product (GDP) ratio of six per cent is rated one of the lowest in the world.
According to her, government would require the support of all stakeholders to achieve its objective of increasing non-oil revenue.
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