Home Business FG Exempts SMEs, Manufacturers, Farmers from Paying Withholding Tax
Business

FG Exempts SMEs, Manufacturers, Farmers from Paying Withholding Tax

Share
FG Exempts SMEs, Manufacturers, Farmers from Paying Withholding Tax | Daily Report Nigeria
Share

The Federal Government has approved a new withholding tax regime, exempting small businesses, manufacturers, and farmers from paying withholding tax.

According to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, the previous withholding tax system, introduced in 1978, had several challenges, including ambiguity, inequity, and straining the working capital of businesses with low margins.

“Withholding tax was introduced to serve as an advance payment of income tax on specified transactions,” Oyedele explained.

“However, as the regime expanded, ambiguities and complications arose, burdening SMEs with excessive compliance and straining low-margin businesses’ working capital.”

The new regime, approved by President Bola Tinubu, introduces key changes, including reduced rates for businesses with low margins, measures to curb evasion and tax avoidance, and clarity on the timing of deductions and key terms.

“This new regime will ease the tax burden on small businesses, manufacturers, and farmers, and encourage economic growth,” Oyedele said. “It’s a significant step in our ongoing fiscal policy and tax reforms.”

READ ALSO: Lagos Police Refute Laide Bakare Harassment Claims, Cite Traffic Violation

Recall that withholding tax is a method of collecting income tax in advance, deducted at rates ranging from 5% to 10% based on the transaction. The penalty for late filing is N25,000 for the first month and N5,000 for each subsequent month of non-compliance.

This approval is the second of five planned executive orders aimed at reducing inflation and growing tax revenue.

Share

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles
World Bank Blacklists 18 Nigerian Firms, Individuals for Corrupt Practices | Daily Report Nigeria
Business

World Bank Clarifies $10.50m Funding to CBN as Grant, Not Loan

The World Bank has clarified that the $10.50 million funding for the...

Nigeria Spends N11.8bn on Apple Imports as Fruit Prices Soar | Daily Report Nigeria
Business

Nigeria Spends N11.8bn on Apple Imports as Fruit Prices Soar

Nigeria imported N11.8 billion worth of apples in the last quarter of...

CBN Speaks on Plans to Revoke Licenses of Fidelity, Wema, Polaris, Unity Banks
Business

CBN Injects $197.71 Million into FX Market to Boost Liquidity

CBN has injected $197.71 million into the foreign exchange market to ensure...

Nigeria’s Public Debt Soars to N144.67 Trillion in 2024 | Daily Report Nigeria
Business

Nigeria’s Public Debt Soars to N144.67 Trillion in 2024

Nigeria’s total public debt hits N144.67 trillion ($94.23 billion) as of December...