- By Halimah Olamide
The chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Tax Oyedele, has revealed that the government has granted approval for the removal of small businesses from withholding tax in the country.
Oyedele, who disclosed this through his X handle on Tuesday said the government has come to terms with the realities that confront small business.
He said the removal is part of the ongoing fiscal policy and tax reforms recommended by his committee.
“The key changes introduced are to address the identified challenges and specifically include exemption of small businesses from Withholding Tax compliance, reduced rates for businesses with low margins, exemptions for manufacturers and producers such as farmers, measures to curb evasion and minimise tax avoidance, ease of obtaining credit and utilisation of tax deducted at source.
Others he listed include changes to reflect emerging issues and adopt global best practices, clarity on the timing of deduction and definition of key terms.
While confirming that the approved regulation is expected to be published in the official gazette in the coming days, Oyedele said the changes were responses to some of the challenges that had been created in the past.
He noted that the challenges had resulted in many businesses, especially SMEs, being exposed to excessive burden of compliance and a strain on the working capital of low-margin businesses.
“Other unintended consequences include ambiguities regarding persons required to comply, eligible transactions, applicable rates, and timing of the obligation for remittance, among others, treatment of the deduction as a separate tax, thereby adding to the list of multiple taxes and cost of doing business, challenges regarding obtaining refunds for excess withholding tax.
He also cited lack of exemption threshold making the cost of compliance by taxpayers and cost of enforcement by the tax authority uneconomical.
He admitted that some emerging and contemporary issues were not properly addressed while the overall structure of the withholding tax regime promoted tax inequity.