A new tax bill has been presented to Nigeria’s National House of Assembly by the executive government.
Dated October 4 2024, the bill is titled “A Bill for an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States, and Local Governments; Prescribe the Powers and Functions of Tax Authorities and for Related Matters.”
The Bill aims to strengthen tax compliance and optimise revenue collection across Nigeria. It also seeks to provide a consolidated fiscal framework for taxation in Nigeria.
Nigeria’s President, Bola Tinubu said, “I am confident that these bills, once passed into law, will encourage and stimulate the economy. While I pray that the House of Representatives will in their usual expeditious manner consider and enact these bills into law, please accept Mr Speaker the assurances of my highest consideration and regards.”
Things you should know about Nigeria’s new tax Bill for 2024 as a business as a business owner.
While the Bill hasn’t been passed into law yet, business owners need to know the positive and negative ways the proposed Bill could affect their business.
In this article we highlight some of the things you should be aware of in the new tax Bill and here are some of them.
Bankers and finance workers will need a Tax ID to open bank accounts
According to the Bill, all individuals engaged in banking, insurance, and stockbroking are to present a tax identification number (TIN) before opening or operating any account.
This is especially important if you run a financial business and have employees. Before the Bill gets passed into law, it might be a good time to get TIN for employees who do not already have one.
According to the Bill, if a taxable individual fails to register for taxes, they will face a penalty of ₦50,000 for the first month of non-compliance and ₦25,000 for each additional month thereafter.
Nevertheless, non-resident individuals earning solely passive income from investments in Nigeria won’t be obligated to register. They will simply need to provide the necessary details as instructed by the relevant tax authority.
Tax exemptions for small businesses
Small companies with transactions valued at ₦2,000,000 or less, and which possess a valid Tax Identification Number (TIN), are exempt from withholding tax. This is a significant move to support small-scale businesses by reducing their tax burden.
If you’re not familiar with the concept of withholding tax; it refers to the portion of an employee’s gross salary that is deducted by the employer and remitted directly to the government. This deducted amount serves as a credit towards the employee’s annual income tax obligations.
