The Federal Government of Nigeria has rolled out new tax regulations aimed at easing the tax burden on Nigeria’s manufacturing sector and small businesses.
Announced through the “Deduction of Tax at Source (Withholding) Regulations, 2024,” signed by Minister of Finance and Coordinating Minister for the Economy, Wale Edun, the new rules are designed to simplify tax deductions and promote business compliance.
“The Deduction of Tax at Source (Withholding) Regulations, 2024 aim to streamline the deduction of taxes at source from payments to taxable persons, reduce complexities, and promote ease of compliance for businesses,” Edun said. The regulations cover payments under various acts, including the Capital Gains Tax Act, Companies Income Tax Act, and Petroleum Profits Tax Act, focusing on promoting global best practices and curbing tax evasion.
The new rules also aim to assist small businesses and manufacturers with tax exemptions, especially for sectors with slim profit margins. One key provision is that businesses without a Tax Identification Number (TIN) will face a doubled deduction rate. “In the case of the supply of goods, rendering of services, or any eligible transaction involving non-passive income, the amount to be deducted at source shall be twice the rate specified in the Schedule where the recipient has no TIN,” the regulations state.
The rules, set to take effect on January 1, 2025, include exemptions for small companies earning N2 million or less monthly, with valid TINs. Tax deductions made will be treated as advance payments towards final tax liability, not as additional costs.
