FMCGs Pay N191bn Tax as Effective Rates Rise

By Chibuzor Alli

Nigeria’s eight largest listed fast-moving consumer goods companies paid a combined N190.66bn in income tax in the first half of 2026, up 53% from N124.59bn a year earlier.

The increase in tax payments was faster than the 48.8% rise in the companies’ combined pre-tax profit, according to an analysis of their unaudited results by The PUNCH.

The higher tax bill also pushed the group’s blended effective tax rate to 39.4% in the first half of 2026, from 38.3% in the same period of 2025.

The companies covered were Nestlé Nigeria, NASCON Allied Industries, Nigerian Breweries, Cadbury Nigeria, International Breweries, Dangote Sugar Refinery, Guinness Nigeria and Champion Breweries.

The figures cover the companies’ first full half-year under Nigeria’s revised tax regime, which took effect in January 2026.

International Breweries records sharpest rise

International Breweries recorded the biggest increase in its effective tax rate, rising from 32.9% in the first half of 2025 to 48.8% in the corresponding period of 2026.

Its tax expense increased by 80.2% to N36.47bn, while pre-tax profit grew by 21.6%.

The increase in tax meant that net profit fell by 7.2% to N38.31bn, despite improvements in revenue, gross margin and operating profit.

Nigerian Breweries also recorded a significant increase in its tax bill. It paid N63.37bn in tax, up 44.6% from N43.83bn a year earlier.

Its pre-tax profit rose by 18.2%, while net profit increased by only 5.1% to N92.95bn.

Nestlé tax bill rises 63.9%

Nestlé Nigeria paid N61.99bn in tax during the period, compared with N37.82bn in the first half of 2025, representing a 63.9% increase.

Its effective tax rate rose to 48.9% from 42.8%, the second-highest among the eight companies.

Revenue increased by 12%, while pre-tax profit rose by 43.4%. Net profit grew by 28.1% to N64.78bn.

NASCON Allied Industries recorded a smaller change in its effective tax rate, which increased from 33% to 34%.

Its tax expense rose by 31.5%, while pre-tax profit increased by 27.6%. Net profit grew by 25.7% to N19.60bn.

Cadbury Nigeria’s effective tax rate remained unchanged at 30%.

Its tax expense fell to N3.47bn from N4.36bn as pre-tax profit declined. Net profit fell by 20.3%, with the company’s performance indicating that the decline was not driven by a change in its tax rate.

Dangote Sugar records lowest effective tax rate

Dangote Sugar Refinery recorded a turnaround from a pre-tax loss of N22.11bn in the first half of 2025 to a pre-tax profit of N44.09bn in the first half of 2026.

The company paid N2.17bn in tax during the loss-making period under Nigeria’s minimum tax rules. Its tax bill rose to N2.58bn in the first half of 2026, giving it an effective tax rate of 5.9%.

The company recorded the most favourable movement in effective tax rate among the companies reviewed.

Guinness Nigeria’s tax expense increased by 78.1% to N13.03bn, pushing its effective tax rate to 34% from 30.7%.

Despite the higher tax bill, pre-tax profit rose by 60.9%, while net profit increased by 53.3% to N25.30bn.

Champion Breweries recorded a different outcome.

Its group pre-tax profit fell by 34.1% from N3.46bn to N2.28bn. However, a tax credit of N368.9m, compared with a N1.17bn tax charge a year earlier, helped net profit rise by 15.6% to N2.65bn.

Analysts raise concerns

Oluwakemi Abiodun, senior analyst, FMCG, at CardinalStone Securities, said the figures showed that tax was becoming a greater burden on earnings for some major consumer goods companies.

“The elevated effective tax rates suggest that tax is becoming a more material drag on earnings for some of the larger FMCGs, particularly the ones being reviewed, where ETRs are above 40 per cent, and this would definitely lower the companies’ EPS,” Abiodun said.

She said the increase could not be attributed entirely to higher statutory tax rates.

“We don’t think this notable increase is solely due to the increase in the statutory tax burden. Rather, we believe the significant divergence in effective tax rate across the sector suggests that company-specific tax positions, which could include payment of deferred taxes and other tax adjustments or incentives, are increasingly influencing post-tax earnings.”

Abiodun said higher tax payments would not automatically result in lower dividends.

“In the case of dividends, it’s not one for one, as a company could decide to increase its payout ratio from its norm when ETRs were lower, and this shouldn’t necessarily affect the dividend it pays.”

She also linked part of the increase to the new tax regime introduced in January.

“Yes, the new tax regime is relevant to the elevated ETRs, as in January 2026, the Nigeria Tax Act introduced a four per cent Development Levy on large companies, alongside a 30 per cent corporate income tax rate, creating a headline burden of approximately 34 per cent. Hence, this tax law is a partial indicator of this increase,” Abiodun said.

Investment Research Analyst Nathanael Disu also linked the higher tax bills to the new tax law, while pointing to the low tax base in the previous year.

“The elevated tax expense for FMCG companies is not unrelated to the new tax laws, which have shaped their bottom line,” Disu said.

He expects the pace of year-on-year growth in tax expenses to ease.

“However, the significant year-on-year jump in the tax expense is largely due to the low base effect from last year. As such, while the effect of the new tax law is the ‘new normal’, we expect the year-on-year change in 2027 to moderate compared to 2026.”