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Federal Government Exempts Small Businesses, Manufacturers, and Farmers from Withholding Tax |
Federal Government Exempts Small Businesses, Manufacturers, and Farmers from Withholding Tax
The Federal Government has approved a new withholding tax regime, exempting small businesses, manufacturers, and farmers from paying withholding tax. This move aims to reduce the tax burden on businesses and stimulate economic growth.
According to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, the new regime also includes:
Reduced rates for businesses with low margins
Measures to curb tax evasion and avoidance
Clarity on timing of deductions and key terms
The previous withholding tax system, introduced in 1978, had challenges such as ambiguity, multiple taxes, and strain on working capital for businesses with low margins.
The new regime, approved by President Bola Tinubu, is part of the ongoing fiscal policy and tax reforms aimed at reducing inflation and growing tax revenue. The official gazette is expected to be signed in the coming days.
This development is the second of five planned executive orders to achieve these goals.