The Federal Inland Revenue Service (FIRS) has introduced new withholding tax regulations aimed at improving tax collection, increasing compliance, and boosting government revenue to support economic growth.
In a statement released yesterday, Collins Omokaro, Special Adviser on Communication and Advocacy to the Executive Chairman of FIRS, highlighted that the updated system is designed to enhance efficiency, ensure transparency, and promote accountability among businesses and employers.
The new framework mandates the deduction of taxes at the point of payment for various transactions, including salaries, rent, professional fees, and dividends.
By placing the responsibility on businesses and employers to withhold and remit taxes, the FIRS seeks to create a more consistent revenue flow while reducing tax evasion.
Key provisions of the regulations include the integration of Tax Identification Numbers (TINs) into transactions and the enforcement of penalties for non-compliance.
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The agency also noted that adjustments to tax rates for residents and non-residents aim to create a fairer tax system, benefiting local businesses while maintaining equity for foreign entities operating in Nigeria.
The FIRS anticipates that the revised tax system will generate additional revenue to fund critical public services, drive economic development, and improve Nigerians’ overall quality of life.
Despite the expected advantages, the agency acknowledged potential challenges in implementation.
Businesses may need to invest in new accounting software and staff training to ensure proper tax deductions and remittances.
Additionally, small businesses and vendors could face compliance difficulties due to limited awareness, while industries such as gaming and telecommunications will have to adjust to sector-specific tax requirements.
FIRS emphasised that the success of the new withholding tax system will depend on effective implementation and collaboration among all stakeholders.
The statement partly read: “The new regulation is a game-changer for Nigeria’s tax landscape. It will ensure that taxes are collected efficiently and transparently while fostering accountability among businesses and employers.
“By placing the responsibility on businesses, employers, and other payers to withhold taxes at the point of payment, the government hopes to ensure a steady revenue inflow and minimise tax evasion.
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“This initiative is expected to create a more equitable tax system where individuals and businesses contribute their fair share to national development.
“However, government agencies must intensify awareness campaigns to help businesses, especially small and medium enterprises, navigate the changes smoothly. The introduction of this regulation comes with high expectations.”
