The Federal Government has eliminated withholding tax on manufacturers, small companies, and farmers, according to Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
A post on X (formerly Twitter) by Oyedele stated, “As part of the ongoing fiscal policy and tax reforms, a new withholding tax regime has been approved.”
“The key changes introduced are to address the identified challenges and specifically include the exemption of small businesses from withholding tax compliance; reduced rates for businesses with low margins; exemptions for manufacturers and producers such as farmers; measures to curb evasion and minimize tax avoidance and the ease of obtaining credit and utilization of tax deducted at source,” he added.
Withholding tax was incorporated into the Nigerian tax system in 1977 to act as an advance payment of income tax on specific transactions, the tax expert reaffirmed.
Continuing, he disclosed, “Changes to reflect emerging issues and adopt global best practices and clarity on the timing of deduction and definition of key terms. The approved regulation is expected to be published in the official gazette in the coming days.
“It was designed to provide the government with regular revenue flow and to serve as a means of curbing tax evasion,” he added.
Following the national brand news, the government’s larger initiatives to assist important economic sectors and lessen the tax burden on small and medium-sized businesses (SMEs) in the nation include the withholding tax exemption.
