FG Exempts Firms With Below N25m Turnover From Paying TaxBusiness, Featured, Latest News Monday, January 6th, 2020
(AFRICAN EXAMINER) – The Federal Government (FG) has announced that small businesses with turnover less than N25m will be exempted from paying Companies Income Tax (CIT).
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed while disclosing this Monday explained that the policy would be effective once the Finance Bill 2019, is signed into law.
Contrary to the present practice, Mrs Ahmed confirmed that once the bill is signed into law, companies that make a turnover of less than N25m will no longer pay this tax, but those poll turnover of between N25m and N100m annually will be made to pay 20 per cent as companies income tax.
She indicated further that firms earning over N100m would continue to pay the 30 per cent of their profits as CIT.
“Not only will small businesses be able to do more because they are not paying taxes, we are also working together with the trade authorities to also encourage people in the informal sector to become formalize because they will see other businesses like them that are not registered doing well.
“Their productivity will increase, they will employ more Nigerians and at the end of the day, they will grow to the level of a medium size business and begin to pay taxes.
“Our assessment is that any business that has a turnover of less than N25m needs that break, not being taxed so they can invest in their businesses.
“We reduced the tax for medium size businesses from 30 per cent to 20 per cent so they can have more resources that they can plough back in their business.
“These are the largest employers of labour. The federal and state governments have a total labour force of less than one per cent of the population’’ the Minister stated.
Mrs Ahmed also disclosed that the National Assembly (NASS) had already forwarded the bill to President Muhammadu Buhari, adding that the President had in turn sent a copy to the Ministries, Departments and Agencies to cross-check the provisions.
A section of the bill according to the Minister comprises 7.5 per cent hike Value Added Tax (VAT) from the former five per cent.
Ahmed noted that it was unfortunate that the public attention only focused on the increase in the VAT, neglecting the benefits of CIT
The current practice is that all companies pay the FG 30 per cent of their profit as CIT.
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