Presidential tax committee proposes withholding tax for manufacturers, farmers
Omeiza Bilal
As a way of reducing tax burden on Nigerians, the Presidential Committee on Fiscal Policy and Tax Reforms has proposed an exemption of manufacturers, farmers and other categories of businesses from paying withholding tax.
Chairman of the Tax Committee, Mr Taiwo Oyedele, revealed this during a public consultation workshop for journalists and public affairs commentators on the proposed changes to the National Tax policy Monday in Abuja said the proposal comes from the need to ensure tax compliance among Nigerians.
“We set out the objectives of what we want to do with withholding tax regulation. One of them is to simplify the tax. We want to reduce the burden on businesses, promote competitiveness, equity and ease of compliance and tax avoidance, detect tax evasion and reflect what is happening globally”
“We are creating an exemption for withholding tax for small businesses and what we have in mind is N50 million. We have reduced the rate for real businesses to as low as 2%- people producing goods and services because the margins are very small.
“We have created an exemption for manufacturers- so if you are a manufacturer, don’t worry about withholding tax. If you provide input to manufacturers like farmers, don’t worry about withholding tax,” Oyedele said.
He further said the committee is proposing the harmonization of taxes collected by the federal, states and local government to about 8 categories from the present high number that has led to tax evasion and underreporting of taxes.
The harmonization, according to him, would include: income tax, property tax, Value Added Tax (VAT), customs duties, excise tax, stamp duties, special levy, and harmonised levy.
He said, “The principles that we are working with is to do away with nuisance taxes with very low revenue yield, high cost of collection and ultimate burden on the poor and small businesses.”
Further proposal by the Presidential Committee include the slashing of cost of collection by revenue generating agencies from 4 per cent to 1 per cent.
Oyedele insisted that the proposals will ensure government agencies stick to their mandate instead of the present duplications of tax collections.
“We are serious with the one per cent and it should cut across everybody, if you cannot collect revenue with one per cent, then you should not be collecting it at all that’s why we were saying let government agencies focus on the primary reason they were set up for,” he explained.
In addition, the Committee is proposing that tax collection is done in such a way that instead of the monthly sharing formula by the Federal Accounts, Allocations Committee (FAAC) the three tiers of government would get their allocations on a daily basis.
“We believe the system can be configured to credit the accounts of local, state, and federal governments daily,” he said.
