Lagos, Nigeria – May 30, 2024
In a significant move aimed at easing the tax burden on businesses, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has announced new recommendations to exempt manufacturers and farmers from withholding tax. This announcement was made at a public forum discussing proposed amendments to the National Tax Policy held in Lagos.
Oyedele highlighted the committee’s objectives to simplify the tax system, promote competitiveness, ensure equity, and ease compliance for businesses. The recommendations are part of a broader effort to modernize Nigeria’s tax policy and align it with global best practices.
“We set out the objectives of what we want to do with withholding tax regulation. One of them is to simplify the tax. We want to reduce the burden on businesses, promote competitiveness, equity and ease of compliance and tax avoidance, detect tax evasion and reflect what is happening globally,” Oyedele said.
A key element of the proposed amendments is the creation of exemptions for small businesses and specific sectors. Oyedele noted that businesses with an annual turnover of up to N50 million would be exempt from withholding tax. Additionally, the withholding tax rate for real businesses producing goods and services has been reduced to as low as 2% due to their small profit margins.
“We have created an exemption for manufacturers- so if you are a manufacturer, don’t worry about withholding tax. If you provide input to manufacturers like farmers, don’t worry about withholding tax,” Oyedele added, underscoring the commitment to support key sectors of the economy.
The recommendations also aim to make Nigeria’s tax policy more equitable and business-friendly, potentially boosting economic growth by reducing operational costs for small businesses and essential sectors like manufacturing and agriculture.
This development has been well-received by stakeholders, who believe that these changes will foster a more conducive environment for business operations and enhance Nigeria’s economic competitiveness. The forum provided a platform for stakeholders to discuss and provide input on the proposed tax policy amendments, ensuring a comprehensive approach to fiscal reform.
The proposed tax policy amendments will now undergo further review and consultations before implementation, marking a significant step towards a more streamlined and supportive tax system in Nigeria.
