The Federal Inland Revenue Service has informed taxpayers that the newly gazetted withholding tax regime will take effect from January 1, 2025.
In a notice signed by FIRS Executive Chairman Zacch Adedeji, the agency confirmed that the current withholding tax regime, as outlined in the Company Income Tax regulation, will remain in force until December 25, 2024.
The FIRS also urged citizens to comply with tax payment regulations.
The notice reads, “The Federal Inland Revenue Service (“the Service”) hereby notifies taxpayers, tax practitioners, and the general public as follows:
1. The Deduction of Tax at Source Withholding (WHT) Regulations, 2024 published in the Federal Government Gazette takes effect from 1st January 2025.
2. The current WHT regime as enshrined in the Companies Income Tax (Rates, ETC, of Taxes Deducted at Source (Withholding Tax) Regulations (S.I.10 of 1997) and relevant WHT provisions remains in force up to and until 31st December 2024.”
Yesterday, the federal government officially gazetted the new withholding tax regulation titled “The Deduction of Tax at Source (Withholding) Regulations, 2024.”
This new regime aims to repeal key provisions of the former withholding tax regulation, which has been in place since 1978.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele had previously stated in June that the federal government had approved the new withholding tax regime, pending official gazette.
The earlier withholding tax system, established in 1978, encountered several challenges, including ambiguity due to the expanded scope of transactions, which led to an increase in the number of taxes, inequities in the system, and pressure on the working capital of low-margin businesses.
The revised withholding tax regime introduces significant changes, such as reduced rates for low-margin businesses, measures to combat tax evasion and avoidance, exemptions for small businesses, and greater clarity on deduction timing and key terms.
