The Federal Government of Nigeria has announced the exemption of farmers, small businesses, and manufacturers from withholding tax as part of its ongoing fiscal policy and tax reforms.
This was disclosed by the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, in a post on his X handle.
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 minimise tax avoidance and the ease of obtaining credit and utilisation of tax deducted at source.”
Withholding tax was first introduced into the Nigerian tax system in 1977 as an advance payment of income tax on specified transactions, designed to provide the government with regular revenue flow and to curb tax evasion.
The new withholding tax regime also includes “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,” Oyedele added.
These reforms are part of the government’s efforts to support local businesses and improve the ease of doing business in Nigeria while ensuring that the tax system is fair and efficient.