To enhance business-friendly policies, the Federal Government has approved a new, simplified withholding tax regime that exempts farmers and small businesses.
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, announced these changes via his X social media handle, today, 2nd of July, 2024.
The new regime aims to address the challenges associated with the existing withholding tax system, which has been in place since 1977.
The outdated system has faced criticism for its complexity, excessive compliance requirements, and negative impact on the working capital of small and low-margin businesses.
Key highlights of the new regime include the exemption of farmers, small businesses, and manufacturers from withholding tax, thereby relieving them from stringent compliance obligations.
Also, businesses with low margins will benefit from reduced withholding tax rates, designed to minimize financial strain and promote growth.
The new measures also focus on simplifying the process of obtaining credits and utilizing tax deducted at source, ensuring smoother operations for businesses. Enhanced strategies to curb tax evasion and minimize avoidance are integral to the new regime, aiming for a fairer tax system.
Oyedele emphasized that these reforms are part of broader fiscal policy and tax reforms pursued by the government to create a more business-friendly environment and stimulate economic growth.
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