News & Updates

New Financial Bill to Exempt Nigerian SMEs from Income Tax

Income tax - cfamedia

It may appear to be a new lease of life for small businesses in Nigeria, as the Federal government is making a provision, in the Finance bill 2019, for ease of doing business.

This bill is set, to be implemented, in 2020, after its presentation, to the National Assembly in October, by President Muhammadu Buhari.

The Finance bill stipulates that, SMEs, having a turnover, of less than N25 million, would get a company income tax exemption.

This might just be a succor to many SMEs and MSMEs, in the country. A significant number of these businesses have, continuously, battled the unfriendly business environment in Nigeria.

An average business owner, in the country, quite often, lay complain, over inadequate access, to financial resources.

More importantly is, the challenge that comes, with the payment of multiple taxes, however, the new finance bill, appears to be set to take care of this problem.

In an analysis made by KPMG, it was concluded that, the initiative is laudable and the proposed modifications, to the fiscal rules, around taxation, are clearly, aimed at creating an enabling business environment and alleviating the tax burden, of small and medium enterprises.

This is expected, to encourage growth and investment, by that sector of the economy.

The bill, also, seeks, to reform domestic tax laws, provide tax incentives to attract investment for infrastructure and the capital markets.

With the government on the verge of increasing tax rates, it, also, sets its eyes, on managing the loopholes present, in the running tax administration.

On signing the bill, effective changes, would take place, in the Nigerian corporate tax laws.

One of the aspects of the bill, stipulates that, organisations, should provide their Tax Identification Number, (TIN). TIN is, a prerequisite to maintain a bank account for companies, in the country.

“FIRS has been freezing the accounts of tax defaulters and insisting on TINs of both new and existing account holders. It is a drastic move, to enforce compliance. The TIN could be used, to monitor/track people’s accounts and curb default”, stated Dr. Gbenga Adebayo, Managing Partner, at Prime Consult concerning compliance with TIN

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