In a move aimed at increasing revenue and promoting tax compliance, the Federal Ministry of Finance has introduced the Deduction at Source (Withholding) Regulations 2024.
The new regulations, approved by the Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, will take effect on July 1, 2024.
The regulations mandate individuals and businesses to deduct taxes at source on eligible transactions, including payments for goods, services, and professional fees.
The rates of deduction vary between 2% and 20%, depending on the type of transaction and the recipient’s residency status.
Failure to comply with the regulations will attract penalties, interest, and administrative sanctions. The regulations also provide for exemptions, including transactions with a taxable presence in Nigeria and winnings from games of chance.
The government expects the new regulations to simplify tax compliance, reduce arbitrage, and align with global best practices. The move is seen as a significant step towards boosting Nigeria’s revenue and promoting economic growth.
The Key Takeaways are:
1. Deduction at source now mandatory for eligible transactions
2. Rates of deduction vary between 2% and 20%
3. Failure to comply attracts penalties, interest, and administrative sanctions
4. Exemptions apply for certain transactions
5. Regulations aim to simplify tax compliance and boost revenue
NNH will keep you informed on the latest updates on this developing story.
