The Federal Government has announced exemptions from withholding tax for farmers, small businesses, and manufacturers. This development was revealed by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, through a post on his X handle.

“As part of the ongoing fiscal policy and tax reforms, a new withholding tax regime has been approved,” Oyedele stated. He detailed several key changes aimed at addressing existing challenges within the tax system:

– Exemption of small businesses from withholding tax compliance.
– Reduced rates for businesses with low margins.
– Exemptions for manufacturers and producers, including farmers.
– Measures to curb tax evasion and minimize tax avoidance.
– Easier access to credit and utilization of tax deducted at source.

Oyedele further explained that the new regime would also include updates to reflect emerging issues, adoption of global best practices, and clear guidelines on the timing of deductions and definitions of key terms. The approved regulation is expected to be published in the official gazette shortly.

Withholding tax was introduced in Nigeria in 1977 as an advance payment of tax on specified transactions. It was designed to provide the government with regular revenue flow and to serve as a mechanism to curb tax evasion, according to Oyedele.

This reform is part of broader efforts by the government to create a more equitable and efficient tax system, supporting economic growth and development, particularly for smaller enterprises and the agricultural sector.