The Federal Government has said that small businesses with turnover less than 25 million naira will be exempted from Companies Income Tax when the Finance Bill 2019 is signed into law.
Currently, all companies are expected to pay to the Federal Government 30 per cent of their profits as Companies Income Tax but the Minister of Finance, Budget and National Planning, Zainab Ahmed, said once the bill was signed into law, companies making a turnover of less than N25m would no longer pay this tax while those that earned between N25m and N100m yearly would pay 20 per cent as Companies Income Tax.
She also stated that those earning over N100m would continue to pay the 30 per cent of their profits as CIT.
“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 informal sector to become formalised because they will see other businesses like them that are registered doing well.
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“Their productivity will increase. They will employ more Nigerians and at the end of the day, they will grow to the level of medium-size businesses and begin to pay taxes,” the Minister said.
She added, “Our assessment is that any business that has a turnover of less than N25m needs that break, not being taxed so they can invest in their businesses.
“We reduced the tax for medium-size businesses from 30 per cent to 20 per cent so that they can have more resources that they can plough back into their businesses.
“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 for assent and the President had sent a copy to the ministries, departments and agencies to cross-check the provisions.
She said it was saddening that the only aspect of the bill Nigerians were focusing on was the increase in Value Added Tax from five to 7.5 per cent.
Yetunde Adegoke
