To lessen the tax burden on enterprises, the federal government has approved exempting manufacturers, farmers, and small businesses from paying withholding tax.
Important modifications to the previous tax system were also implemented, including lower rates for companies with narrow profit margins and steps to prevent tax cheating.
Income tax can be collected in advance through the use of withholding tax, which is withheld at rates that vary from 5% to 10% depending on the transaction.
President Bola Tinubu approved the country’s new withholding tax regime, and the official gazette is anticipated to be signed in the coming days, according to Taiwo Oyedele, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
Oyedele made this announcement yesterday in a post on his official X handle.
He claims that the previous withholding tax system, which was implemented in 1978, had drawbacks, including unfairness, straining the working capital of companies with thin margins, and ambiguity resulting from the rise in transactions it covered.
According to Oyedele, the new withholding tax system has several important modifications, such as lower rates for companies with low profit margins, steps to stop tax cheating and avoidance, exemptions for small enterprises from withholding tax, and clarification on important words and deduction time.
He stated,
The latest approval is the second of five planned executive orders to reduce inflation and grow tax revenue.
TimesNow.com.ng reported that president Bola Tinubu’s administration is working to prune down taxes in Nigeria from the current 62 to a maximum of nine to create a business-friendly environment.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, stated this at the 2023 Annual Conference of the Institute of Chartered Accountants of Nigeria (ICAN) in Abuja on Tuesday, October 10, 2023.
Oyedele, who asked the Nigerian government to remove VAT from diesel, said the step is essential as the current multiple tax system in the country has made tax administration difficult and ineffective.
Source: TimesNow.com.ng
