Finance Bill: Firms with less than N25m turnover will not pay company tax, says minister
However, CIT of 30 per cent still applies to those raking in over N100m
ZAINAB Ahmed, Minister of Finance, Budget and National Planning said that the passing of the Finance Bill into law would exempt businesses with turnover less than N25m from paying companies income tax.
Under the CIT law in Nigeria, all companies are expected to pay to the Federal Government 30 per cent of their profits as Companies Income Tax, therefore “tax is charged on profits for the accounting year ending in the year preceding assessment.”
However, the minister has revealed that the charges will cease to apply to companies making a profit of less than N25m because they are the top labour providers, according to a reported by Punch.
“Their productivity will increase. They will employ more Nigerians and at the end of the day, they will grow to the level of medium-size businesses and begin to pay taxes.
“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 formalised because they will see other businesses like them that are registered performing well,” she said.
Subsequently, companies that earn between N25m and N100m yearly would pay 20 per cent as CIT while those that raked in more than an N100m will be taxed 30 per cent of their profit.
“We reduced the tax for medium-size businesses from 30 per cent to 20 per cent so that they can have more resources to plough back into their businesses.
The minister said the bill has been sent by the Executive to select ministries and departments and agencies for double-checks before it is passed into law.
She also noted that it was wrong for Nigerians to focus only on the increment on the Value Added Tax.