The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele has stated that the committee has proposed an exemption of manufacturers and farmers from paying withholding tax as a way of reducing the tax burden on businesses.
This was disclosed during a public consultation workshop on the proposed changes to the National Tax policy held in Lagos.
According to him, withholding tax is the most difficult to comply with in Nigeria due to its complexity.
He said, “We set out the objectives of what we want to do with withholding tax regulation. One of them is to simplify the tax. We want to reduce the burden on businesses, promote competitiveness, equity and ease of compliance and tax avoidance, detect tax evasion and reflect what is happening globally”
“We are creating an exemption for withholding tax for small businesses and what we have in mind is N50 million. We have reduced the rate for real businesses to as low as 2%- people producing goods and services because the margins are very small.”
“We have created an exemption for manufacturers- so if you are a manufacturer, don’t worry about withholding tax. If you provide input to manufacturers like farmers, don’t worry about withholding tax”
He explained that the proposal had already been signed and would be made public in a few days.
Furthermore, Mr. Oyedele noted that for businesses not registered with the Corporate Affairs Commission (CAC), tax agents should deduct 200% of the normal tax rate for them for non-registration as a check to make companies and businesses register.
Customs exchange rate at N800/$
Other regulations proposed by the committee include pegging the customs duties exchange rate with the exchange rate in the 2024 budget which is N800/$.
According to the Chairman of the committee, the frequent changes in the customs duties rate do not favour any form of long-term planning and it’s detrimental to business operations.
He said a fixed exchange rate for customs duties should last the rest of the year.
What you should know
According to the Federal Inland Revenue Service (FIRS), Withholding Tax (WHT) is a method used to collect Income Tax in advance, deducted at varying rates ranging from 5% to 10% depending on the transaction, with returns due by the 21st of each succeeding month.
The penalty for late filing of N25,000 for the first month and N5,000 for each subsequent month the failure continues.
Businesses especially in the manufacturing sector have complained bitterly about the plague of multiple taxation. The Manufacturers Association of Nigeria had earlier lamented that its members pay as much as 60 different taxes and levies, and this negatively affects the productivity of the sector.
