EoDB: Relief for manufacturers, others as Nigeria gazettes, releases new Withholding Tax Regulations

*The Federal Government has gazetted, and released the official document of the Deduction of Tax at Source (Withholding Tax) Regulations 2024, as part of the holistic fiscal policy reform of President Bola Ahmed Tinubu’s administration to offer relief to manufacturers and other businesses in the Nigerian economy

Gbenga Kayode | ConsumerConnect

The Federal Government of Nigeria has gazetted and released the official document of the Deduction of Tax at Source (Withholding Tax) Regulations 2024, as part of the holistic fiscal policy reform of President Bola Ahmed Tinubu’s administration.

ConsumerConnect reports Mr. Taiwo Oyedele, Chairman of the Presidential Taskforce on Fiscal Policy and Tax Reforms Committee, Tuesday, October 1, 2024, had confirmed the development in a statement issued via his verified social media account.

Mr. Taiwo Oyedele, Chairman of the Presidential Taskforce on Fiscal Policy and Tax Reforms Committee

Withholding Tax has been described as a tax collection mechanism that serves as an advance payment of Income Tax.

It is deducted at source directly from payments for required transactions.

Mr. Olawale Edun, Honourable Minister for Finance and Coordinating Minister of the Economy, signed the new WHT dated September 30, 2024.

Oyedele, who also disclosed this during the Independence Day special event on Channels TV, tagged, “Nigeria’s Challenging Economy: Strategies For Recovery”, and monitored in Lagos, said the new gazetted WHT Regulations would be published Wednesday, October 2.

It is also recalled that Mr. Edun July 1 this year, had announced the Deduction of Tax at Source (Withholding) Regulations 2024 as part of President Tinubu’s ongoing economic reforms in Nigeria.

According to Oyedele, the new Regulations 2024 commenced September 30 this year but actual implementation will begin January 1, 2025, in order to allow for a minimum of 90 days’ notice required for tax changes in line with the 2017 National Tax Policy.

He noted there is a provision permitting the Federal Inland Revenue Service (FIRS), with the approval of the Finance Minister Edun, to issue guidelines for implementing the Regulations and, where appropriate, permit early application of the Regulations from July 1, 2024.

The Chairman further stressed the essence of this provision is to enable persons and businesses that wish to adopt the Regulations early to do so, given that it generally provides relief to businesses rather than imposing a burden.

Major changes in Withholding Tax Regulations 2024

The Withholding Tax Regulations 2024 specifically grants rate reductions and full exemption from Withholding Tax to several Nigerian businesses, including Small and Medium Enterprises (SMEs) with annual turnover not exceeding N25 million.

1) Exemption of small businesses from Withholding Tax compliance

2) Reduced rates for businesses with low margins

3) Exemptions for manufacturers and producers, such as farmers

4) Measures to curb evasion and minimise tax avoidance

5) Ease of obtaining credit and utilisation of tax deducted at source

6) Changes to reflect emerging issues and adopt global best practices, and

7) Clarity on the timing of deduction and definition of key terms

Key positives of WHT 2024 for government processes and bureaucracy

The Chairman of the Fiscal Policy and Tax Reforms Committee said: “We have seen some of the processes within government are very slow, the bureaucracy can be better.

“So, one of the positives is that by going through this process of trying to do a holistic fiscal reform, we have also identified those areas where we can make things easier, such that next time when there is an approval by the government almost immediately you can feel the impact.”

He also averred: “I do have some good news; the good news is that the Withholding Tax Regulation has now been gazetted.

“So, the only reason it hasn’t been published today is because it is public holiday, so first thing tomorrow you will see a copy of the gazette, and that provides a lot of relief not just for manufacturers but also every other business in terms of taking away some of the burdens of funding their working capital.”

The Committee’s 3 pillars to enhance Ease of Doing Business in Nigeria, by Oyedele

Oyedele further expatiated on how the Presidential Taskforce on Fiscal Policy and Tax Reforms Committee has continued to work on improving the Ease of Doing Business in Nigeria.

This is one of the three pillars of the work of the Committee, said he.

The Chairman also stated: “Essentially, when you are talking about Ease of Doing Business, it is one of the three pillars of the work of my Committee along with so many Nigerians who are members of that committee, putting in everything that they can without asking for anything in return because they love their country and that gives us hope.”

As President Tinubu equally affirmed in his national broadcast on the occasion of the commemoration of Nigeria’s 64th Independence Anniversary Tuesday, Oyedele said the Federal Executive Council (FEC) had approved the Economic Stabilisation Bill, which his revealed that Committee had been working on for some months.

The bill will go to the National Assembly (NASS), in Abuja, FCT, in a couple of days where it is expected to be passed into law, Oyedele added.

Please click here to download a copy of the Withholding Tax Regulations 2024.

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