Starting January 2025, small businesses, manufacturers, and farmers will benefit from a newly approved tax regime that exempts them from Withholding Tax (WHT), pending any last-minute changes.
The Withholding Tax Regulations (2024) introduces these exemptions to alleviate financial burdens on small enterprises and offer reduced rates for low-margin businesses. This initiative also includes specific tax breaks for manufacturers and farmers to bolster the agricultural sector.
Analysts see this reform as a significant opportunity for SMEs to grow and potentially advance to higher stages of business development. The total tax exemption for SMEs with monthly revenues below N2 million is anticipated to positively impact the economy by easing administrative burdens and enabling businesses to concentrate on expansion.
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Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, praised the move, stating it would streamline operations for SMEs. However, experts emphasize that the benefits will only be realized if businesses utilize the savings wisely.
Akinyele Oladeji from CSDC Consulting highlighted that the tax exemption could enhance financial stability for SMEs, advising reinvestment of savings into business growth. He stressed that while the government is empowering SMEs, it continues to explore other revenue streams, such as the increased windfall tax on banks’ foreign exchange gains, to ensure equitable wealth distribution.
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