The Nigerian Federal Government has approved a new withholding tax system aimed at boosting revenue generation. This announcement was made by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, via his official X handle on Tuesday.
The approved withholding tax regime, which involves deducting tax at the source, includes exemptions for small businesses and reduced rates for businesses with low margins. Manufacturers and producers, such as farmers, are also exempt from withholding tax compliance.
Oyedele highlighted that the new system includes measures to curb tax evasion and minimize avoidance, easing the process of obtaining credit and utilizing tax deducted at source. The regime also incorporates changes to address emerging issues, adopts global best practices, and clarifies the timing of deductions and key term definitions.
“As part of the ongoing fiscal policy and tax reforms, a new withholding tax regime has been approved,” he stated.
He added that the approved tax regulation is expected to be published in the official gazette in the coming days.
Recall that withholding tax was introduced into the Nigerian tax system in 1977 to serve as an advance payment of income tax on specified transactions.
In July 2023, President Bola Ahmed Tinubu inaugurated the Oyedele-chaired committee to address key challenges in Nigeria’s tax system.
Nigeria collected N12.37 trillion in revenue in 2023. Similarly, in the first quarter of 2024, Nigeria’s revenue collection surged to N3.94 trillion, with a target of N19.4 trillion for the entire year.
Meanwhile, the Debt Management Office recently announced that the country’s total debt profile increased to N121.67 trillion as of the end of March 2024.
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