The Federal Government has introduced new tax regulations aimed at easing the tax burden on the manufacturing sector and small businesses.
The “Deduction of Tax at Source (Withholding) Regulations, 2024,” signed by Finance Minister Wale Edun, seeks to streamline tax deductions, reduce complexities, and enhance compliance for businesses.
The regulations cover payments under the Capital Gains Tax Act, Companies Income Tax Act, Petroleum Profits Tax Act, and the Personal Income Tax Act. They promote global best practices, curb tax evasion, and reduce inconsistencies between corporate and non-corporate structures.
One significant provision is the exemption for small businesses with a turnover of N2 million or less in a calendar month, provided they have a valid Tax Identification Number (TIN). Businesses without a TIN will face a doubled deduction rate for eligible transactions. The regulations also ensure that deducted taxes are treated as advance payments, not additional costs.
The new rules, effective January 1, 2025, offer early application from July 1, 2024, in certain cases. The Federal Inland Revenue Service will provide further guidelines to ensure proper implementation.
These regulations align with the government’s efforts to modernize the tax system, support small businesses, and foster compliance across sectors.
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