By Charles Ebi
Federal Government has moved to exempt farmers, small businesses, and manufacturers from paying withholding tax as the country is making final preparations for a new tax regime.
This is according to the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, in a post on X, formerly known as Twitter.
“As part of the ongoing fiscal policy and tax reforms, a new withholding tax regime has been approved”, he disclosed yesterday.
“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 minimise tax avoidance and the ease of obtaining credit and utilisation of tax deducted at source”, he added.
The tax expert noted that, “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”.
He said withholding tax came into effect in Nigeria in 1977 and was meant to serve as an advance tax payment on specified transactions.
“It was designed to provide the government with regular revenue flow and to serve as a means of curbing tax evasion”, the former PwC employee stated.
Nigeria is set to announce a new set of policies that revolves around borrowing, spending, and taxation before the year ends as President Bola Tinubu’s administration had stated its mandate to expand the tax net to such an extent that the country is collecting tax to Gross Domestic Product ,GDP, reaching the 18% threshold.
The move will see the compression of many unofficial taxes coupled into eight harmonised taxes including harmonised taxes and levies including income tax, property tax, Value Added Tax ,VAT, customs duties, excise tax, stamp duties, special levy, and harmonised levy.
