By Shola Abayomi.
As part of measures to improve the business climate in Nigeria, the Federal Government has moved to exempt small businesses with turnover less than N25m from being taxed.
This was disclosed by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who noted that the policy would be implemented when the Finance Bill 2019 is signed into law.
She also noted that the government reduced the tax for medium size businesses from 30 per cent to 20 per cent, to enable them have more resources to plough back in their business.
The minister said, “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 formalise 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 revenue.
“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 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.”
It was learnt that all companies in the country currently pays 30 per cent of its profit to the Federal Government as Companies Income Tax.
The minister revealed that the Finance Bill has been forwarded by the National Assembly to President Muhammadu Buhari for assent; a copy of which was being cross-checked by the Ministries, Departments and Agencies on the directive of the president.