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The Nigerian government has officially published the Deduction of Tax at Source (Withholding) Regulations, 2024 in the Federal Republic of Nigeria’s official gazette, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee.
Mr. Oyedele announced the release of the new regulation on his official X handle on Wednesday. The gazette serves as a formal publication for legislative and administrative texts, such as laws, decrees, and government notices.
“The Deduction of Tax at Source (Withholding) Regulations, 2024, is now published in the official gazette. This regulation introduces a reduction in withholding tax rates and grants full exemptions to several businesses, particularly small and medium-sized enterprises (SMEs) with an annual turnover not exceeding N25 million,” Oyedele stated.
The new regulations, effective from September 30, 2024, will be implemented starting January 1, 2025. This timeframe allows for the minimum 90-day notice required for tax changes, in line with the 2017 National Tax Policy.
However, the regulation also provides flexibility for businesses seeking to adopt the new guidelines earlier. With approval from the Finance Minister, the Federal Inland Revenue Service (FIRS) may issue guidelines for the early application of the regulations, permitting businesses to benefit from them as early as July 1, 2024.
“The early adoption provision is intended to provide relief to businesses rather than impose any additional burden,” Mr. Oyedele explained.
In July, Oyedele had announced the federal government’s approval of a new, business-friendly withholding tax regime. The key changes were aimed at easing the compliance burden on SMEs and agricultural businesses, promoting a more business-conducive environment.
The Federal Inland Revenue Service (FIRS) has clarified that Withholding Tax (WHT) serves as an advance payment of Income Tax, with rates ranging from 5% to 10%, depending on the transaction type. Businesses are required to file returns by the 21st of the following month, with penalties for late filings set at N25,000 for the first month and N5,000 for each additional month.
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