THE House of Representatives has passed for a second reading a bill seeking an amendment to the Companies Income Tax Act (CITA)
The bill seeks to provide adequate security and guarantee for businesses and companies to pay minimum tax upon losses in each assessment year.
It is sponsored by the member representing Yenagoa/Kolokuma/Opokuma Federal Constituency of Bayelsa State, Oboku Abonsizeibe Oforji.
It seeks to amend Section 33 of the Principal Act by deleting the phrase “results in a loss or where a company’s ascertained total profits” in Section 33 subsection 1, and by inserting a new subsection (D) in Section 33(3).
Section 33:3 (D) is to read; “Any company in operation that records losses in the assessment year.”
The bill seeks to amend the provision in relation to the assessment of companies for the payment of tax in each assessment year.
The emphasis is to protect the companies which are in operation but with losses from paying minimum tax.
The amendment primarily proposes an exemption for such categories of companies under the Companies Income Tax Act in each assessment year.
On the aggregate, Company Income Tax (CIT) for first-quarter (Q1) 2024 was reported at N984.61 billion, indicating a growth rate of –12.87 per cent on a quarter-on-quarter basis from N1.13 trillion in fourth-quarter 2023.
Local payments received amounted to N386.49 billion while Foreign CIT Payment contributed N598.13 billion in the first quarter of 2024.
According to the Federal Inland Revenue Service (FIRS), Company Income Tax, also known as Corporate Tax, is a tax levied on the profits made by companies operating in Nigeria. It is regulated by the Companies Income Tax Act (CITA) under the supervision of FIRS.
For Company Income Tax purposes, the taxable amount is the company’s profits for the accounting year or period after deducting allowable expenses and applicable reliefs as stipulated under CITA.
This includes profits from trade or business, rent on properties, premiums, interest from investments dividends, interest, and royalties among others.
The ICIR reported the ongoing debates at the National Assembly over tax reform bills.
Following the controversies arising from the tax reform bills, the Senate leadership has directed its committee on finance to suspend further action on the bills pending the outcome of a high-level meeting with the attorney general of the federation (AGF).
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.