ther key changes include measures to prevent evasion and tax avoidance, ease of obtaining credit, and clarity on deduction timing and key terms.
Chief Bola Ahmed Tinubu has approved a new withholding tax policy, replacing the outdated system established in 1977.
The announcement was made by Taiwo Ayodele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, on Tuesday.
The new policy aims to alleviate the tax burden on farmers and Small and Medium Enterprises (SMEs) who were significantly impacted by the previous regime.
Ayodele explained that the withholding tax, initially introduced in 1977, was designed as an advance payment of income tax on specified transactions to ensure regular revenue flow for the government and curb tax evasion.
He stated, “Withholding tax was introduced into the Nigeria tax system in 1977 to serve as an advance payment of income tax on specified transactions. It was designed to provide the government with regular revenue flow and to serve as a means of curbing tax evasion.”
Key changes in the new policy include promoting tax equity and exempting small businesses from withholding tax compliance. Additionally, manufacturers, producers, and farmers will benefit from exemptions, and businesses with low margins will see reduced rates.
The new regime also includes measures to prevent tax evasion and avoidance, facilitate credit acquisition, and provide clarity on deduction timing and key terms. Ayodele noted that the new policy would be published in the official gazette soon.
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