The Finance Bill 2019, when signed into law, will ensure that small businesses with turnover less than N25 million will be exempted from Companies Income Tax.
Currently, all companies are expected to pay the Federal Government 30 per cent of its turnover as companies income tax.
However, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said once the bill is signed into law, companies that make a turnover of less than N25 million will no longer pay this tax while those that earn between N25 million and N100 million yearly will now pay 20 per cent as companies income tax.
She said those earning over N100 million will continue to pay the 30 per cent.
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 formal 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 N25 million 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 than 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.”
On when the bill will be signed into law, Ahmed said the National Assembly had already forwarded it to the President, Major General Muhammadu Buhari (rtd.), for assent and the President had sent a copy to the Ministries, Departments and Agencies to cross-check the provisions.
She regretted that the only aspect of the bill Nigerians focussed on was the increase in Value Added Tax from five per cent to 7.5 per cent.
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