Nigeria’s Federal Ministry of Finance has announced the Deduction of Tax at Source (Withholding) Regulations 2024 has been published in the official gazette on Wednesday 2 October 2024.
The commencement date of the new Regulations is 30 September 2024, while implementation will begin on 1 January 2025 to allow for a minimum of 90 days notice required for tax changes in line with the 2017 National Tax Policy.
However, there is a provision permitting the FIRS, with the approval of the Finance Minister, to issue guidelines for the implementation of the Regulations and where appropriate, permit early application of the Regulations from 1 July 2024.
The Regulations grant rate reduction and full exemption from Withholding Tax to many businesses, including SMEs with annual turnover not exceeding N25 million. The regulations also grant reduced rates for businesses with low margins.
The new regulations largely remain unchanged, but telephone charges, internet data, and airline tickets are now exempt. The regulations also specify that the second schedule’s format is the approved template for remittance and returns of deducted amounts at source.
Withholding tax was introduced into the Nigeria tax system in 1977 to serve as an advance payment of income tax on specified transactions. It was designed to provide the government with regular revenue flow and to serve as a means of curbing tax evasion.
Earlier, Nigeria’s federal government introduced the new withholding tax regime on 2 July 2024 as part of efforts to reform the fiscal and taxation system.
