The Finance Bill 2019, when signed into law, will see small businesses with less than N25m turnover exempted from Companies Income Tax (company tax).
This was disclosed by the Minister of Finance, Budget and National Planning, Zainab Ahmed.
The Minister who explained that although all companies are still expected to pay the Federal Government 30 percent of their profit as Company Income Tax, for now, once the bill is signed into law, companies that make a turnover of less than N25m will no longer pay this tax, while those that have a turnover of between N25m and N100m yearly will now pay 20 percent as companies income tax.
Ahmed however, explained that those making a turnover of over N100m will continue to pay the 30 percent company tax.
On when the bill will be signed into law, Ahmed disclosed that the National Assembly had already forwarded it to the President for assent and the President had sent a copy to the Ministries, Departments, and Agencies to cross-check the provisions.
She said it was saddening that the only aspect of the bill Nigerians were focusing on was the increase in Value Added Tax from 5 percent to 7.5 percent.
Continuing, the minister said the tax review will help small businesses to be more productive.
“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 formalized because they will see other businesses like them that are not registered to do 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 revenue,” she said.
“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. And we reduced the tax for medium-size businesses from 30 percent to 20 per cent so they can have more resources that they can plough back in their business,” Ahmed Concluded.