The Federal Government of Nigeria has officially launched the 2024 Withholding Tax Regulations, which came into effect on January 1, 2025.
The reforms, initially approved in July 2024 and published in the Official Gazette in October, aim to modernize Nigeria’s tax system, reduce compliance burdens, and address inefficiencies.
The new tax regime, signed into law by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, is designed to ease the financial and administrative burdens on businesses, particularly Small and Medium Enterprises (SMEs), farmers, manufacturers, and producers.
Key highlights of the reforms include the exemption of SMEs from withholding tax compliance, which will help mitigate operational costs and support sectoral growth. The revised regulations also grant exemptions to manufacturers and farmers to encourage development in these critical sectors. Furthermore, the new provisions aim to minimize tax evasion, enhance transparency in remittances, and streamline the process for obtaining tax credits.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, emphasized that the previous withholding tax system had become overly complicated, creating numerous challenges for businesses. These included unclear compliance requirements, excessive burdens on low-margin businesses, and a lack of an exemption threshold. The new regulations address these issues by simplifying processes and making the system more equitable and efficient.
