Small Businesses, Farmers, Manufacturers Exempted From Withholding Tax -Oyedele
By Alice Etuka, Abuja
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele said the Federal Government has approved the exemption of small businesses, manufacturers and farmers from paying withholding tax as a way of reducing the tax burden on businesses.
Oyedele announced this in a post on his official X handle on Tuesday, July 2, 2024.
He hinted that President Bola Tinubu had approved the new withholding tax regime for the country with the official gazette expected to be signed in the coming days.
According to him, the erstwhile withholding tax system introduced in 1978 had challenges such as the ambiguity necessitated by the increase in transactions that it covered, thereby increasing the list of multiple taxes, inequity, straining the working capital of businesses with low margins, among others.
Withholding Tax is a method of collecting Income Tax in advance, deducted at rates ranging from 5 per cent to 10 per cent based on the transaction.
Oyedele further stated that key changes introduced to the rewritten withholding tax regime include reduced rates for businesses with low margins, measures to curb evasion and tax avoidance, exemption of small businesses from withholding tax, clarity on the timing of deductions and key terms among others.
