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Home Business & Finance

New Withholding Tax Policy Takes Effect

Nnaemeka OkwarabyNnaemeka Okwara
January 2, 2025
in Business & Finance
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New Withholding Tax Policy Takes Effect
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Implementation of Withholding Tax Regulations prepared for 2024 has been initiated by the Government of the Federation of Nigeria marking an important step forward toward modernizing the nation’s tax system.

The new regulations were approved by President Bola Ahmed Tinubu in July 2024 and published as an official bill of the Official Gazette in October, but were put into effect as from January 1, 2025. The policy, formally titled the “Deduction of Tax at Source (Withholding) Regulations, 2024,” intended to ease tax compliance, minimize inefficiencies and reduce the administrative burden on businesses.

On January 1,2025, the Chairman of the Presidential committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele announced the new tax policy on his X (formerly Twitter) account. The Chairman also mentioned features of the reform, such as including the Small and Medium Enterprises (SMEs) exemption from withholding tax compliance, intended to alleviate administrative burdens and ensure the growth of the sector.

The regulations also provide reduced withholding tax rates for businesses with low-profit margins as a way of improving cash flow and lowering operational costs. Furthermore, there is also no withholding tax obligation on manufacturers, producers, and farmers as an indication of the determination of the government to strengthen these segments of the economy.

The reforms deal with long-standing issues in the Nigerian tax system, such as ambiguities associated with timing and definitions in deductions, towards achieving compliance and transparency. And makes simplifications in processes for obtaining tax credits easy for businesses to be able to readily apply their available deductions.

The Federal Government had previously made known the entire scope of the reforms in “Deduction of Tax at Source (Withholding) Regulations, 2024.” This was signed by the minister of finance and coordinating minister of the economy, Wale Edun. Deductions have been made under different tax acts, among them the Capital Gains Tax Act, Companies Income Tax Act, Petroleum Profits Tax Act, and the Personal Income Tax Act.

Tags: Businesseffectfederal characterNew Withholding Tax Policy Takes EffectNewspolicytax
Nnaemeka Okwara

Nnaemeka Okwara

Okwara Nnaemeka Emmanuel is a skilled wordsmith, passionate blogger, and content writer with a degree in Media Content, He has made a significant mark in the industry. He also holds certification in Marketing and advertising. He has honed a unique blend of creativity and strategic thinking.Driven by a belief in the power of creativity, He has established a niche for himself in diverse regions, leaving a trail of successful projects and satisfied clients. His ability to craft compelling narratives and engage audiences sets him apart in the competitive world of content creation.As a dedicated professional, He continues to push boundaries and set new landmarks in their field. Whether it's through captivating blog posts, persuasive copywriting, or innovative content strategies, Nnaemeka’s consistently delivers excellence, leaving a long lasting impact

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