Despite steep quarterly decline, year-on-year growth signals resilience in the corporate tax base…..
Nigeria’s Company Income Tax (CIT) collections experienced a sharp decline in the fourth quarter of 2025, falling to ₦1.49 trillion from ₦2.96 trillion in Q3, according to data released by the National Bureau of Statistics. This represents a staggering 49.8% quarter-on-quarter contraction, highlighting short-term volatility in corporate tax inflows.
The drop comes amid shifting macroeconomic conditions and potential seasonal adjustments in corporate earnings, suggesting that while quarterly revenues are volatile, the broader corporate tax base remains relatively strong. On a year-on-year basis, CIT collections in Q4 2025 were 13.38% higher than the same period in 2024, reflecting underlying resilience.
Domestic vs. Foreign Contributions
A breakdown of the figures shows a fairly balanced contribution between domestic and foreign sources:
- Domestic CIT: ₦819.83 billion
- Foreign CIT: ₦668.21 billion
Despite the quarterly slump, multinational companies and cross-border operations continue to play a significant role in sustaining federal revenue.
Sectoral performance in Q4 2025 was mixed, with some industries posting strong gains while others faced significant contractions:
Top performers:
- Extraterritorial organisations and bodies: +75.15%
- Education: +54.2%
- Real estate: +27.25%
Sectors in decline:
- Accommodation and food services: –11%
- Household employment: -63.49%
- Mining and quarrying: -49.63%
Major contributors to total CIT:
- Financial and insurance activities: 18.74%
- Manufacturing: 17.3%
- Mining and quarrying: 04%
Smaller contributors included households as employers (0.002%), water supply and waste management (0.04%), and extraterritorial organisations (0.17%).
Policy Context
Recent reforms may influence future tax performance. In March 2025, the federal government introduced new presumptive tax rules for Micro, Small, and Medium Enterprises (MSMEs) to simplify compliance and integrate more businesses into the formal economy.
Additionally, President Bola Tinubu signed four key tax reform bills into law in June 2025:
- Nigeria Tax Bill
- Nigeria Tax Administration Bill
- Nigeria Revenue Service (Establishment) Bill
- Joint Revenue Board (Establishment) Bill
These measures aim to strengthen revenue collection, streamline administration, and broaden the tax base.
Looking Back: Q3 2025 Context
CIT revenue in Q3 2025 had reached ₦2.96 trillion, a 6.55% increase from Q2 2025. Domestic CIT contributed ₦1.21 trillion, while foreign CIT added ₦1.75 trillion, highlighting continued profitability among multinational companies. The Q3 growth underscored steady corporate earnings and compliance ahead of the Q4 drop.
While Q4’s sharp decline raises short-term concerns, analysts suggest that long-term trends indicate a resilient and gradually formalising corporate tax base, with fiscal reforms and sectoral contributions expected to support sustainable revenue generation in the years ahead.
