President Bola Tinubu has given his nod to a new withholding tax policy, marking a significant departure from the 1977 Nigeria tax system.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Ayodele, announced the development on Tuesday.
The revised policy aims to address the challenges of the old regime, including ambiguities, multiple taxes, and refund difficulties. Ayodele highlighted the need for a more equitable and efficient tax system, citing the previous regime’s promotion of tax inequity.
The new policy exempts small businesses from withholding tax compliance, reduces rates for low-margin businesses, and exempts manufacturers and producers, including farmers. Additional reforms include measures to curb evasion, ease of obtaining credit, and global best practices.
The approved document will be published in the official gazette in a few days, signaling a significant shift in Nigeria’s tax landscape. The changes are expected to alleviate the burden on farmers and Small and Medium Enterprises (SMEs), promoting a more conducive business environment.
“Withholding tax was introduced in 1977 to provide regular revenue flow and curb tax evasion. However, the old regime had several challenges, including ambiguities and multiple taxes,” Ayodele explained. “The new policy addresses these issues, promoting tax equity and ease of compliance.”
