FG to exempt small businesses from paying withholding tax

The presidential fiscal policy and tax reforms committee has disclosed plans to review the national withholding tax laws to exempt small businesses from paying withholding taxes.

Taiwo Oyedele, chairman of the committee, disclosed this on Tuesday during a stakeholder engagement session with trade associations and non-government organisations, including the Civil Society and Religious Organisations.

According to him, the associations and NGOs are also critical for sound national development, considering their mandates, including advocating for good governance and promoting social impact and public interest.

He disclosed that key issues under consideration for the committee include a new national tax & fiscal policy framework, harmonisation (taxes and levies, revenue administration, reporting) and setting up of a single national revenue window.

Others include consolidation and redrafting of major tax laws, introducing a new withholding tax (deduction at source) regime with lower rates for active income, the exemption for SMEs, and clarity regarding key requirements such as cash basis and credit notes.

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He said, “We do not want to tax capital, investment, we do not want to production, and we do not want to tax poverty, and as Mr President put it correctly, We do not want to tax seeds but tax fruit.

“And what that means, essentially, is that Nigeria, as a country, would work with you and support you, to invest, to plant the seeds, we work with you to water it, till it grows and when the fruits come up, now we can share it with the country by way of taxes.

“And even those taxes have to be reasonable. Number five is we do not plan to introduce new taxes. We think that we can collect more. By just closing the gap in compliance and addressing significant levels of invasion in our country.

“And that also means that we want to repeal many of the existing taxes and exempt more people who should not be paying taxes and are being asked to pay.”

He also disclosed plans to revamp the tax agent’s function, emphasising competence and ethics. This, according to him, will address cases of corruption among officials.

Noting NGOs’ key challenges, including harsh environmental regulation and taxation regimes, Oyedele said that the government is working to ensure a friendly environment, freedom of association and economic reforms.

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He also hinted at measures to address duplication of functions in public service to ensure prudent public financial
management and optimise value from government assets and natural resources.

Speaking on expected outcomes, he said, “First, we expect to be able to achieve sustainable growth and economic diversification, not just by GDP as we have it. Now, in terms of foreign exchange receipts. That would mean that our country is less exposed to risk, particularly external risks like Russia, Ukraine or Hamas and Israel are having issues. It affects us.

“We must develop our policy to be self-sufficient in most critical areas. In my view, those critical areas include food security, energy, and security. You must be able to provide your own energy, electricity and whatever forms of energy you need to power your economy, and the third one is health security.”

In his remarks, Chinedu Bassey, the program manager at Civil Society Legislative Advocacy Centre (CISLAC) urged the committee to recognise and protect the rights of NGOs and civil societies in the country.

He also stressed the need for long-term low-interest rate loans to ease access to finance for small businesses and policies that promote made-in-Nigeria goods in the country.