The Federal Government has introduced new tax regulations aimed at easing the burden on manufacturers and small businesses, in a bid to stimulate economic growth.
The “Deduction of Tax at Source (Withholding) Regulations, 2024,” signed by Finance Minister Wale Edun on Wednesday, sought to simplify tax deductions, reduce evasion, and promote global best practices.
Under the new rules, payments made under the Capital Gains Tax Act, Companies Income Tax Act, Petroleum Profits Tax Act, and Personal Income Tax Act will be covered.
Small businesses and manufacturers will benefit from tax exemptions, particularly in sectors with low profit margins.
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Businesses that do not provide Tax Identification Number (TIN) will face a doubled deduction rate for eligible transactions.
Various entities, including government ministries and public authorities, are mandated to deduct taxes at source for eligible transactions.
However, small companies with turnover of N2 million or less in calendar month and possessing valid TIN are exempted from this requirement.
Regulations are set to come into effect on January 1, 2025, but provisions allow for early application from July 1, 2024, in some cases.
Federal Inland Revenue Service (FIRS) will issue further guidelines to ensure smooth implementation, subject to approval of the Finance Ministry.
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