There is a 2.24 per cent increase in the Company Income Tax (CIT) paid by 14 deposit money banks (DMBs) for the 2014 financial year bringing total tax paid to over N106 billion
Fourteen (14) Nigeria’s money deposit banks (MDBs) paid company income tax (CIT) of N106.07 billion in 2014, according to reports of the financial services institutions submitted to the Nigerian Stock Exchange (NSE) as at December 31.
The figure was N2.32 billion over N103.75 billion paid in the previous financial year, representing 2.24 per cent.
Zenith Bank paid the highest CIT of N20.34 billion among the 14 reporting banks. This was N5.06 billion or 33.1 per cent over the CIT paid in 2013. This was based on a pre-tax profit of N119.8 billion which is 8.3 per cent above the profit it made in 2013. The difference was N9.2 billion.The tax paid by Zenith Bank constitutes about 19.17 per cent of the total tax paid by the14 reporting banks.
Eco Bank paid N20.34 billion making it second highest tax payers among the 14 banks, notwithstanding that the bank does not rank the second highest on the profit before tax (PBT) table for 2014. It paid 98.7 per cent (N9.82 billion) more than what it paid in 2013 financial year.Eco Bank made a PAT ofN88.44 billion in 2014 compared to N35.37 billion it recorded in 2013 financial year.
Guaranty Trust Bank (GTB) paid N17.69 billion CIT making it third on the tax table after making a PAT of N116.39 billion for the 2014 financial year. This is 8.7 per cent greater than what the transnational bank made in 2013 that left it with a tax liability of N17.07 billion.
First Bank of Nigeria Holding (FBN) was the only bank aside FCMB and UBA that paid less tax in 2014 than what they paid in 2013, irrespective of improvement in their profit for the year. Though their PBT appreciated by 1.69 per cent from N91.34 billion in 2013 financial year to N92.88 billion in 2014, they paid a tax that is 51.47 per cent lower. Their tax payment for 2014 was N10.05 billion which is less than half of the N20.71 billion they paid in 2013 financial year.
Access Bank, UBA and Stanbic/ IBTC are next on the tax list after paying N8.95, N8.29and N8.01 billion respectively from a PAT ofN52.20, 56.2 and 40.07 billion respectively. The tax they paid was 19.3 and 108.59 per cent greater than what the banks paid in 2013 for Access Bank and Stanbic IBTC respectively. While UBA paid a tax of N9.46 billion in 2013 which is 12.37 per cent lower than what it paid in the 2014 financial year.
Unity Bank and Diamond Bank paid N2.95 and N2.62 billion tax in 2014 respectively, which is 73.33 and 25.99 per cent lower than N11.06 and N3.54 billion the banks paid in 2013 financial year respectively. Diamond bank paid less tax in 2014 financial year due to the fact that they experienced a12.41 per cent depreciation in profit.
FCMB, Sterling Bank, Fidelity, Union Bank and Wema Bank paid a total of N6.87 billion tax which is less than half of what the first three highest tax payers recorded. The tax paid by these five banks accounted for just 6.48 per cent of the total tax paid by all the banks.
The old generation banks Union Bank, UBA and First Bank altogether paid N19.22 billion CIT which is 18.12 per cent of the total tax paid by the 14 reporting banks. While the new generation banks accounted for the remaining 81.78 per cent of the tax paid. This is N87.85 billion of the overall N106.07 billion paid by all 14 banks. Among these banks, Union Bank paid the lowest tax of N880 million since it earned the lowest PBT of N27.71 billion in 2014 financial year.
The tier-one banks which consist of Zenith Bank, GTB,UBA, First Bank and Access Bank paid N65.32 billion tax altogether, accounting for the 61.58 per cent of the total tax paid by the banks concerned. The others accounted for the remaining 38.42 per cent of taxes paid by the banks in 2014 financial year. These tier-one banks, aside Eco-Bank,also topped the banks’ profit table after making N437.47 billion as pre-tax profit which accounted for72.87 per cent of the total pre-tax profit made by the banks under reference..
Analysts say the hike in the CIT paid by the banks in 2014, aside from the increase in their profit, was as a result of rigidity in the enforcement of the new tax drive by the Federal Inland Revenue Service (FIRS). This is due to the attention paid to non-oil sector tax sources following the fall in oil revenue since June 2014. The banks are also subject to other taxes like Education Tax, Value Added Tax (VAT) and others which eat into their profits every year.
Improvement in bank supervision and stiff monetary policies enforced by the Central Bank of Nigeria (CBN) have made the banks to be more prudent in their activities and to pursue non-performing loans to reduce their negative impact on their operations.