The Federal Government has exempted manufacturers and farmers from paying the new withholding tax regime.
The Chairman of the Tax and Fiscal Reform committee, Taiwo Oyedele explained that the approved regulation was expected to be published in the official gazette of the federation in the coming days.
He said in a statement on Tuesday a simplified and business-friendly withholding tax regime has been approved, stressing that the withholding tax was designed to provide the government with regular revenue flow and to serve as a means of curbing tax evasion.
The chairman noted that some of the other changes affected were reduced rates for businesses with low margins, exemptions for manufacturers and producers such as farmers as well as measures to curb evasion and minimise tax avoidance.
He added: “The key changes introduced were to address the identified challenges and specifically include: Exemption of small businesses from withholding tax compliance.
Also included are the ease of obtain ing credit and utilisation of tax deducted at source, changes to reflect emerging issues and adopt global best practices as well as clarity on the timing of deduction and definition of key terms.”
The withholding tax was introduced into the Nigerian tax system in 1977 to serve as an advanced payment of income tax on specified transactions. Oyedele said that the challenges started coming up as the regime expanded over time to cover more transactions with various ambiguities and complications creeping in.