The Nigerian National Petroleum Company Limited has reported a total tax expense of N2.69 trillion for the fiscal year 2023, according to its financial statement published yesterday on the company’s website.
However, the actual taxes paid by NNPCL in 2023 amounted to N1.17 trillion. This total includes N497.26 billion in income tax and N669.09 billion in royalties, as detailed in the company’s cash flow report.
In stark contrast to 2023, NNPCL received a tax credit of N717.07 billion in 2022. Last year, the Nigeria Extractive Industry Transparency Initiative (NEITI) accused the company of failing to remit up to N2.8 trillion in taxes to the federation and not paying about N4 trillion to the federal government.
NEITI’s report also noted that, as of July 31, 2023, the Nigerian Upstream Petroleum Regulatory Commission had outstanding tax revenues totaling $8.251 billion as of December 31, 2022, with over 80% of this amount attributed to NNPCL.
NNPCL, through its Corporate Communication Officer Olufemi Soneye, clarified that it had not withheld any public funds. The company explained that the alleged non-remittance reported by NEITI actually represented payments owed to NNPCL for covering the fuel subsidy on behalf of the Federal Government.
In 2022, the fuel subsidy budget was N4 trillion, but costs escalated to N4.39 trillion or $10 billion by the year’s end, accounting for 40% of the country’s total revenue. President Tinubu ended the subsidy policy upon taking office.
NNPCL’s income tax payments for 2023 reached N497.2 billion, marking a dramatic increase of 385% from the N102.5 billion paid in 2022. This substantial rise indicates a significant adjustment in the company’s tax responsibilities, possibly due to increased profitability or changes in tax regulations.
Royalties paid by NNPCL also saw a remarkable surge, totaling N669 billion in 2023. This figure represents a staggering increase of 774.5% from the N76.5 billion paid in the previous year. Such a sharp rise in royalty payments may reflect higher production volumes, changes in royalty rates, or adjustments in the valuation of resources.
In addition to these taxes, NNPCL distributed N546.6 billion in dividends to the Federal Government, a notable development as there were no dividend payments made in 2022. This payment highlights the company’s improved financial performance or a strategic decision to share profits more extensively with the government.
The Petroleum Profit Tax, another critical component of NNPCL’s tax obligations, amounted to N1.22 trillion in 2023. This represents a substantial increase from the N613.16 billion recorded in 2022. The more than 100% increase in this tax category underscores the growth in the company’s revenue or an adjustment in tax policy affecting oil sector profits.
Education tax payments also saw a significant rise, reaching N153.94 billion in 2023. This is a 377% increase from the N32.26 billion paid in the previous year. The substantial growth in education tax could reflect increased revenue or a policy change aimed at enhancing funding for educational initiatives.
Conversely, payments to the Police Trust Fund decreased considerably to N349 million, a sharp decline from the N13.18 billion paid in 2022. This reduction might indicate changes in the funding requirements for the trust fund or shifts in the company’s financial priorities.
These figures reflect a significant rise in tax obligations and payments, indicating a notable shift from the previous year’s financial dynamics.
