The Federal Government has announced an exemption from withholding tax for farmers, small businesses, and manufacturers. This decision is part of the ongoing fiscal policy and tax reforms, according to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
In a recent post on his social media platform, Oyedele detailed the new withholding tax regime. He highlighted several key changes:
- Exemptions for Small Businesses: Small businesses are now exempt from complying with withholding tax requirements.
- Reduced Rates: Businesses operating with low profit margins will benefit from reduced withholding tax rates.
- Exemptions for Manufacturers and Farmers: Manufacturers, including farmers, are exempt from paying withholding tax.
- Anti-Evasion Measures: New measures have been introduced to curb tax evasion and minimize avoidance.
- Ease of Credit Utilization: The reforms aim to simplify the process of obtaining and utilizing tax credits deducted at the source.
Withholding tax was first introduced into Nigeria’s tax system in 1977. It was designed as an advance payment of income tax on specified transactions to ensure a regular revenue flow for the government and to help curb tax evasion.
Oyedele also mentioned that the new regulations would reflect emerging issues, adopt global best practices, and provide clarity on the timing of tax deductions and definitions of key terms. These changes will be published in the official gazette shortly.
