MARKET NEWS

written by Bamidele Ogunwusi

LAGOS – Nigeria’s efforts to strengthen non-oil revenue suffered a setback in the first quarter of 2026 as Company Income Tax (CIT) collections declined sharply, reflecting weaker remittances from local firms and the impact of a stronger naira on foreign tax payments. 

Data released by the National Bureau of Statistics (NBS) showed that total CIT receipts stood at N1.4 trillion in Q1 2026, representing an eight per cent quarter-on-quarter decline and a much steeper 31 per cent year-on-year contraction. 

Although first-quarter tax collections are traditionally weaker because many companies settle their obligations later in the year, analysts said the scale of the decline also points to softer domestic tax remittances and exchange-rate effects that reduced the naira value of taxes paid by multinational companies. 

The latest figures come as the Federal Government pursues sweeping tax reforms aimed at broadening the tax base, improving compliance and reducing dependence on oil revenue. 

The NBS data showed that local companies accounted for much of the decline. Tax collections from indigenous firms fell to N589.9 billion, down from N819.8 billion in the fourth quarter of 2025 and N646.5 billion in the corresponding period last year. 

Despite the slowdown, the financial and insurance sector remained Nigeria’s largest corporate taxpayer, contributing N133.3 billion, or about one-quarter of total local collections. 

Analysts attributed the sector’s resilience to strong bank earnings driven by high interest rates, improved investment income from government securities and stronger treasury operations. 

The mining and quarrying sector ranked second with N86.6 billion, although its tax payments declined significantly from both the previous quarter and a year earlier, reflecting weaker profitability. 

Manufacturing followed with N74.5 billion, while the information and communication sector contributed N63.6 billion. 

Together, manufacturing and telecommunications remained key pillars of Nigeria’s non-oil economy despite challenges such as inflation, high energy costs and infrastructure constraints. 

Foreign company tax collections presented a mixed picture. 

While receipts increased 24 per cent quarter-on-quarter, they fell 38 per cent year-on-year to N828.8 billion. 

Economists attributed the annual decline largely to the appreciation of the naira. During the first quarter of 2026, the average exchange rate stood at N1,385.19/$, compared with N1,524.19/$ in the same period of 2025. 

Since many multinational firms pay taxes linked to dollar earnings, the stronger naira reduced the local currency value of those payments. 

Analysts noted that while exchange-rate stability has helped ease inflationary pressures and restore confidence in the foreign exchange market, it has also reduced the translation gains government previously enjoyed from dollar-denominated tax receipts.