Small and medium-scale enterprises (SMEs) have been urged to prioritize proper documentation and agreements to mitigate unnecessary tax liabilities, especially in light of recent changes to Nigeria’s withholding tax regulations. This advice was shared by industry experts during the first edition of the United Bank for Africa (UBA) Knowledge Series webinar, held in Lagos. The event, titled “2024 Withholding Tax Regulations: Specific Emphasis on How They Affect SMEs,” served as a platform for discussions on the new tax policies and how SMEs can adapt to them in order to thrive in 2025 and beyond.
The webinar featured prominent speakers, including Babatunde Ajayi, Head of SME Banking at UBA; Adeyemi Adeniran, a financial analyst at Anderson Consulting; and Vincent Okoukoni, also a financial analyst at Anderson Consulting. The experts provided practical advice and strategies for SMEs to navigate the new withholding tax regulations, emphasizing the importance of compliance to avoid financial burdens and seize growth opportunities.
Adeniran explained the fundamentals of the updated withholding tax regulations, noting that the new system aims to correct inefficiencies in the previous tax regime and ensure timely tax remittances. “What this means is that while individuals and companies are required to pay their taxes at the end of the year, the government is saying, through withholding taxes, that it cannot wait until the end of the year to collect these taxes because it has immediate obligations,” Adeniran said. He went on to explain that, under the new regulations, customers are required to withhold a portion of the tax at the point of transaction and remit it to the government, rather than waiting until year-end.
The expert also highlighted the key conditions SMEs must meet to comply with the new system. “The business must be registered with the tax authority, and the transaction amount in any given month should not exceed N2 million,” Adeniran stated, emphasizing the need for SMEs to ensure they meet these conditions to avoid penalties.
Okoukoni further clarified the benefits of the 2024 withholding tax regulations for SMEs, particularly those with a turnover of less than N25 million. According to the new guidelines, businesses in this category are exempt from tax deductions on payments received. “This means SMEs with an annual turnover of less than N25 million will receive full payments from their customers, directly improving cash flow,” Okoukoni explained. “This is a significant benefit, as it allows businesses to retain more funds, which can be reinvested into their operations to support growth.”
Babatunde Ajayi, Head of SME Banking at UBA, emphasized the bank’s commitment to supporting SMEs under the new tax framework. “At UBA, we will continue to ensure SMEs receive the support they need to thrive, particularly under the new withholding tax regulations,” Ajayi affirmed. “SMEs are innovators and risk-takers who play a pivotal role in shaping the future of Africa’s economy.”
In her closing remarks, Alero Ladipo, Group Head of Marketing and Corporate Communications at UBA, commended the participants for their insightful contributions and highlighted the importance of the webinar for guiding SMEs through the evolving tax landscape. “At UBA, it’s not just about banking; we are passionate about helping our customers grow successful businesses. That’s why we have launched this new series to enhance the knowledge of our SME customers,” Ladipo said.
UBA, one of the largest financial institutions in Africa, serves over 45 million customers globally and employs 25,000 staff across the continent. The bank’s commitment to supporting SMEs through initiatives like the Knowledge Series reflects its broader mission to foster growth and innovation within the African economy. The new tax regulations present challenges, but with proper guidance and support, SMEs can navigate the changes successfully and continue to contribute to the continent’s economic development.