The Federal Government has officially gazetted the Withholding Tax Regulations, 2024, with implementation set to start in January 2025. This new regime offers relief to businesses, especially SMEs, and introduces several key changes aimed at simplifying tax compliance and boosting economic growth.
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, announced the gazetting of the new regulations on Wednesday. He explained that the Withholding Tax Regulations, 2024, have been published, granting reduced tax rates and exemptions for many businesses, particularly small and medium-sized enterprises (SMEs) with an annual turnover of less than N25 million.
The official commencement of the regulations is set for 30th September 2024, with implementation beginning on 1st January 2025. Oyedele noted that this timeline adheres to the 2017 National Tax Policy, which mandates a minimum of 90 days’ notice for any tax changes.
However, there is an option for early implementation. “The FIRS, with the approval of the Finance Minister, may issue guidelines for the regulations to be applied from 1st July 2024 for those businesses that prefer early adoption, especially since these measures provide relief rather than additional burdens,” Oyedele explained.
The new regulations are designed to address challenges like ambiguity around compliance, eligible transactions, and applicable rates. Notably, small businesses are exempt from Withholding Tax compliance and reduced tax rates apply to companies with lower profit margins. Additionally, exemptions are provided for manufacturers and producers, including farmers.
To strengthen compliance, measures will be implemented to curb tax evasion and make it easier for businesses to access tax credits for amounts deducted at source. The regulations also aim to reflect global best practices, including clearer guidelines on the timing of deductions and better definitions of key terms.
According to Oyedele, the full details of the approved regulations will soon be available in the official gazette.
