The 2020 financial year was a tough period for Nigerian companies due to COVID-19 pandemic and unfriendly operating environment.The operating environment before the advent of Covid-19 was challenging with companies battling to live up to expectation in terms of Corporate Social Responsibility (CSR), income tax payments, dividends to shareholders and projects for host communities.
spite of the challenging operating environment, some quoted companies had a good outing in terms of corporate income tax as well as dividend declaration in the review period.
According to recent estimates from the International Centre for Tax and Development, tax revenues account for more than 80 per cent of total government revenue in about half of the countries of the world and more than 50 per cent in almost every country. Specifically in Nigeria, the search for a sustainable source of public finance has brought taxation to the forefront.
is further reinforced by the dwindling oil revenue, which has led to increasing reliance on debt as a way of financing the country’s yearly budget.It is noteworthy that as 2020 audited financial reports continue to trickle in, some companies have boosted government revenue with huge corporate income tax payments.
Ironically, manufacturing firms operate in unfriendly environment coupled with inadequate power supply, lack of infrastructure, scarcity of foreign exchange pay higher taxes compared with their peers in the financial industry.For instance, about 11 banks paid a total of N123.3 billion in taxes even though they are said to be more profitable than the 10 manufacturing firms who paid a combined N157.17 billion in taxes in 2020.The banking sector has also been a great contributor in terms of tax to government, going by the figures of the some of the banks that have announced their audited 2020 results.From all indications, it is obvious that if the government makes the environment more conducive for companies to operate, the net corporate tax revenue would be higher.Analysis of Dangote Cement’s report showed that it sold 15.9 metric tonnes in 2020 from 14.1MT, including both cement and clinker sales, representing an increase of 12.9 per cent.Revenues for the company’s Nigerian operations increased by 18 per cent to N720 billion owing to demand in the domestic market.
This volume growth was enhanced by a successful innovative national consumer promotion “Bag of Goodies – Season 2” and lower rains in the third quarter compared to the previous year. It posted a strong Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) of N421.4 indicating a margin of 59 per cent.Dangote Cement posted a record high Pan-African EBITDA of N71.3 billion, which went up by 49.0 per cent. Within the period under review, the cement group commissioned its gas power plant in Tanzania. The chief executive officer, Dangote Cement, Michel Puchercos, in his comments on the results, said: “2020 was a good year for Dangote Cement across board.“Several firsts made 2020 a productive year such as our maiden clinker shipment, maiden bond issuance and successful buyback programme. “We increased our capacity by 3MT in Nigeria, commissioned our two export terminals and commissioned our gas power plant in Tanzania.“All these were achieved whilst we focused on protecting our people, customers and communities from the impact of the pandemic.”He explained that the company’s profitability was further bolstered by its disciplined cost control measures in a highly inflationary and volatile year. “These measures resulted in a 37.7 per cent increase in profit after tax to N276.1 billion. “I am delighted to report that Dangote Cement experienced its strongest year in terms of EBITDA and strongest year in terms of volumes.“Despite a challenging environment, Group volumes for the year were up 8.6 per cent and Group EBITDA was up 20.9 per cent,” continued Puchercos.
The excellent performance of Nigerian companies, particularly Dangote Cement, in terms of payment of corporate tax is not lost on the chief operating officer of InvestData Ltd, Mr Ambrose Omordion who said corporate Nigerians had over the years paid their taxes to the government, and that this was deducted before declaring profit.Omordion said the taxes had boosted the revenue of the government, enabling it to fund the national budget to drive infrastructural development and grow the economy. (NAN)