Stakeholders have urged the federal government to increase the annual turnover threshold for small businesses eligible for exemption from the newly implemented Withholding Tax (WHT) regulation to N100 million, rather than the current N25 million. The government recently introduced a WHT regulation that offers a rate reduction and full exemption for small businesses with an annual turnover not exceeding N25 million.

While stakeholders have expressed appreciation for this initiative aimed at alleviating the tax burden on businesses to stimulate the manufacturing sector and attract investments, they believe the threshold is insufficient.

In an exclusive interview with Vanguard, Dr. Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), remarked, “The gazetting of the withholding tax waiver is indeed encouraging news, signaling hope for micro, small, and medium enterprises (MSMEs). However, considering the current economic landscape and the devaluation of the naira, the N25 million turnover limit is too low, equating to less than $15,000. We propose raising the benchmark to N75 million to better align with economic realities.”

Similarly, Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), commented, “The WHT policy for small businesses is commendable, but the government must raise the threshold. In light of the prevailing economic conditions, particularly inflation, a turnover of N25 million is inadequate and primarily addresses micro enterprises. For small and medium enterprises (SMEs), the threshold should be expanded to at least N100 million to make a meaningful impact.”

“N25 million is insufficient; even vendors selling amala can achieve a turnover of N25 million annually. It’s important to note that this figure represents turnover, not profit, and is quite low considering current market prices.

“Additionally, I would like to acknowledge the new withholding tax regulations for manufacturers, which I believe will provide significant relief for those utilizing locally sourced materials. There are several positive provisions for manufacturers overall that deserve recognition.”

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, last week, announced the “Deduction of Tax at Source (Withholding) Regulations, 2024”.

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, elaborated on this matter, stating that the recently published WHT regulations in the gazette provide for reduced rates and complete exemption from withholding tax for small businesses with an annual turnover of up to N25 million.