The Federal Government has approved a simplified and business-friendly withholding tax regime, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee.
The new regime aims to address challenges with the existing withholding tax system, which was introduced in 1977 to curb tax evasion and provide regular revenue flow. The existing system had become cumbersome, with ambiguities and complications that:
– Burdened SMEs with excessive compliance requirements
– Strained the working capital of low-margin businesses
– Created ambiguities around compliance requirements, eligible transactions, and applicable rates
The simplified regime aims to ease the burden on businesses and improve compliance.
Details of the new regime are yet to be released, but it is expected to provide clarity and relief to taxpayers.
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