The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said the committee has proposed that manufacturers and farmers be exempted from paying withholding tax as a way of reducing the tax burden on businesses.
He disclosed this during a public consultation workshop on the proposed changes to the National Tax policy in Lagos.
According to him, withholding tax is the most difficult to comply with in Nigeria due to its complexity.
In his words: “We set out the objectives of what we want to do with withholding tax regulation. One of them is to simplify the tax. We want to reduce the burden on businesses, promote competitiveness, equity and ease of compliance and tax avoidance, detect tax evasion and reflect what is happening globally.
“We are creating an exemption for withholding tax for small businesses and what we have in mind is N50 million. We have reduced the rate for real businesses to as low as 2% for people producing goods and services because the margins are very small.
“We have created an exemption for manufacturers. So, if you are a manufacturer, don’t worry about withholding tax. If you provide input to manufacturers like farmers, don’t worry about withholding tax.”
He explained that the proposal had already been signed and would be made public shortly.
According to Oyedele, other regulations proposed by the committee include pegging the customs duties exchange rate with the exchange rate in the 2024 budget which is N800/$.
He said that the frequent changes in the customs duties rate do not favour any form of long-term planning and it’s detrimental to business operations.
Oyedele added that a fixed exchange rate for customs duties should last the rest of the year.