Global Daily Tax News, Nigerian Withholding Tax Regulations Now Effective, (Jul 15, 2024)

The Deduction at Source (Withholding) Regulations 2024 took effect on July 1, 2024.

The regulations are intended to simplify and clarify the withholding tax regime and align it with global best practices. They cover matters other than tax withheld under the Pay-As-You-Earn tax regime.

The Chairman of the Presidential Committee on Fiscal Policy, Taiwo Oyedele, explained that the withholding tax system had grown increasingly complex and ambiguous since its introduction in 1977, stating: "This resulted in many businesses, especially SMEs, being exposed to excessive burden of compliance and a strain on the working capital of low-margin businesses."

Mr Oyedele said key changes in the regulations include exemptions for small businesses, reduced rates for businesses with low margins, exemptions for manufacturers and producers, and measures to prevent tax evasion and avoidance.