Nigeria’s new Finance Bill will ensure the exemption of small businesses with an annual turnover of less than N25 million from Company Income Tax.
Nigeria’s Minister of Finance, Budget and National Planning, Zainab Ahmed, has disclosed that the new Finance Bill, when signed into law, would have only companies doing a turnover of over N100 million pay 30% Company Income Tax while companies with turnover of between N25 million and N100 million annually will pay 20%.
“Our assessment is that any business that has a turnover of less than N25m needs that break, not being taxed so they can invest in their businesses. And we reduced the tax for medium-size businesses from 30 per cent to 20 per cent so they can have more resources that they can plough back in their business. These are the largest employers of labour. The federal and state governments have a total labour force of less than one per cent of the population.
“Not only will small businesses be able to do more because they are not paying taxes, but we are also working together with the trade authorities to also encourage people in the informal sector to become formalise because they will see other businesses like them that are not registered doing well.
“Their productivity will increase, they will employ more Nigerians and at the end of the day, they will grow to the level of a medium-size business and begin to pay revenue,” Ahmed said.
Meanwhile, now that the new Finance Bill has not been signed in law, all companies are expected to pay the Federal Government 30% of its profit as Companies Income Tax.
Speaking on the signing of the bill into law, Ahmed stated that the National Assembly had forwarded it to the President for assent and the President had sent a copy to the Ministries, Departments and Agencies to cross-check the provisions.
Meanwhile, the minister also expressed her disappointment in Nigerians, stating that the only aspect of the new bill citizenry focused on was the increase in Value Added Tax from 5% to 7.5%.