According to Vanguard, The Federal Government has approved significant changes to the withholding tax regime aimed at reducing the tax burden on businesses. Small businesses, manufacturers, and farmers will now be exempt from paying withholding tax, marking a pivotal shift in tax policy to support economic growth and reduce compliance challenges.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, announced the approval by President Bola Tinubu, highlighting key amendments to the previous regime. These include reduced tax rates for businesses with low margins, measures to combat tax evasion, and clarity on deduction timing and terms.
Withholding tax, originally introduced in Nigeria in 1977, has evolved to cover more transactions over time, leading to complexities and increased compliance burdens, particularly for SMEs and businesses with narrow profit margins.
Oyedele emphasized that the new regime aims to streamline operations, provide exemptions where necessary, and foster a more equitable tax environment conducive to business growth and sustainability.