The Federal Ministry of Finance has announced new regulations for the deduction of tax at source, effective July 1, 2024.
The regulations, signed by the Honourable Minister of Finance and Coordinating Minister of the Economy, Adebayo Olawale Edun, is aimed to clarify and streamline the process of tax deduction at source (Withholding) regulation 2024.
The regulations apply to eligible transactions under the Capital Gains Tax Act, Companies Income Tax Act, Petroleum Profits Tax Act, and Personal Income Tax Act.
They specify the rates at which deductions shall be made at source (withholding), with reduced rates applicable to eligible recipients resident in treaty countries.
The regulations required certain persons, including corporate bodies, government agencies, and payment agents, to deduct tax at source on eligible transactions.
However, small companies and unincorporated bodies with equivalent attributes are exempt from this requirement, provided the supplier has a valid Tax Identification Number and the transaction value is N2 million or less.
The regulations also specify the timing of deduction, remittance, and submission of returns. Failure to comply with the regulations may result in penalties and interest.
Exemptions from deduction at source include compensating payments under registered securities lending transactions, across-the-counter transactions, and certain payments to Nigerian banks.
The regulations also defined key terms, including “manufacturing” and “professional fees.”
These regulations supersede any other regulations on deductions at source and aim to promote clarity and efficiency in tax administration.
Boluwatife Enome
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