The Nigerian Federal Government has announced that farmers, small businesses, and manufacturers are now exempt from withholding tax, according to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
In a post on his X handle, Oyedele detailed the changes: “As part of the ongoing fiscal policy and tax reforms, a new withholding tax regime has been approved. The key changes introduced to address the identified challenges and specifically include the exemption of small businesses from withholding tax compliance; reduced rates for businesses with low margins; exemptions for manufacturers and producers such as farmers; measures to curb evasion and minimize tax avoidance; and the ease of obtaining credit and utilization of tax deducted at source.”
Other changes include adapting to emerging issues and global best practices and clarifying the timing of deduction and definition of key terms. The new regulations are expected to be published in the official gazette soon.
Withholding tax, introduced into Nigeria’s tax system in 1977, was initially designed as an advance payment of income tax on specified transactions to provide the government with regular revenue flow and curb tax evasion.
