THE Federal government has gazetted the regulation on Withholding Tax (WHT), setting the implementation date to January 1, 2025.

The chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, disclosed this on his official X-handle on Wednesday, October 2.

He said, “The deduction of tax at source (Withholding) Regulations, 2024, has been published in the official gazette.

“The commencement date of the new Regulations is 30th September 2024, while implementation begins on 1st January 2025 to allow for a minimum of 90 days notice required for tax changes in line with the 2017 National Tax Policy.”

According to Oyedele, the regulations grant rates reduction and full exemption from withholding tax to many businesses, including SMEs with annual turnover not exceeding N25 million.

He stated, however, that there was a provision permitting the Federal Inland Revenue Service (FIRS), with the approval of Finance Minister Wale Edun, to issue guidelines for the implementation of the regulations and, where appropriate, permit early application of the regulations from July 1, 2024.

“The essence of this provision is to enable persons who wish to adopt the Regulations early to do so given that it is generally providing reliefs to businesses rather than imposing a burden,” he explained.

The ICIR reported in July that the federal government approved the Oyedele-led committee’s recommendations on the exemption of withholding tax for small businesses, manufacturers, and farmers.

The recommendations were part of the ongoing fiscal policy and tax reforms, setting a new withholding tax regime for the country.

The key changes in the regulation include the exemption of small businesses from withholding tax compliance, reduction of tax rates for businesses with low margins, exemption of manufacturers and producers such as farmers, and measures to curb evasion and minimise tax avoidance.

Other changes made are ease of obtaining credit and utilisation of tax deducted at source; changes to reflect emerging issues and adopt global best practices; and clarity on the timing of deduction and definition of key terms.

Withholding tax was introduced into the Nigeria tax system in 1977 to serve as an advance payment of income tax on specified transactions.

It was designed to provide the government with regular revenue flow and to serve as a means of curbing tax evasion.