FG Gazettes the Deduction of Tax at Source (Withholding Tax) Regulations 2024
- Implementation to begin on January 1, 2025
The official document of the Deduction of Tax at Source (Withholding) Regulations, 2024, has been published in the official gazette. The Regulations grant rate reductions and full exemption from Withholding Tax to many businesses, including Small and Medium Enterprises (SMEs) with annual turnover not exceeding N25m.
Recall that the new Withholding Tax regime, approved in July 2024, has the following changes:
1) Exemption of small businesses from Withholding Tax compliance
2) Reduced rates for businesses with low margins
3) Exemptions for manufacturers and producers, such as farmers
4) Measures to curb evasion and minimise tax avoidance
5) Ease of obtaining credit and utilisation of tax deducted at source
6) Changes to reflect emerging issues and adopt global best practices
7) Clarity on the timing of deduction and definition of key terms
The new Regulations commenced on September 30, 2024, but implementation will begin on January 1, 2025, to allow for a minimum of 90 days’ notice required for tax changes in line with the 2017 National Tax Policy.
According to Mr Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, there is a provision permitting the Federal Inland Revenue Service (FIRS), with the approval of the Finance Minister Mr Wale Edun, to issue guidelines for implementing the Regulations and, where appropriate, permit early application of the Regulations from July 1, 2024. The essence of this provision is to enable persons who wish to adopt the Regulations early to do so, given that it generally provides relief to businesses rather than imposing a burden.
