The Federal Ministry of Finance has unveiled new regulations aimed at promoting entrepreneurship, academics, technology, and scientific innovation by granting significant tax exemptions on winnings from games of chance and reality shows.
Effective from October 1, 2024, these exemptions are designed to stimulate participation in activities that contribute to national development in critical sectors.
According to documents obtained by Nairametrics, these exemptions specifically apply to the net payouts received by participants in games or reality shows focused on entrepreneurship, academics, technology, or scientific innovation.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Adebayo Olawale Edun, announced these measures as part of broader efforts to enhance innovation and academic excellence across Nigeria.
The new regulations define “winning” as the net payout to a participant in a game of chance or reality show session, calculated at the end of a session not exceeding one calendar month. This ensures that participants are taxed only on the actual net gains received, thereby encouraging more individuals to engage in activities that promote national development.
The introduction of these exemptions forms part of the “Withholding Tax Regulations 2024,” which outlines various tax deduction processes and rates for different transactions. This regulatory framework underscores the government’s commitment to creating a conducive environment for innovation and education.
Under these new rules, popular reality shows such as Big Brother Naija (BBNaija), renowned for its substantial prize money, will benefit from tax-free winnings for participants. For instance, the upcoming Season 9 of BBNaija, themed “Two Journeys in One House,” will see winners exempted from tax deductions on their prize money. Previous winners have received significant cash prizes, with last season’s winner taking home N120 million.
In addition to game and reality show winnings, the new regulations also exempt all electricity companies, including generation and distribution companies, from payment of withholding tax nationwide. Withholding Tax, first introduced in Nigeria’s tax system in 1977, serves as an advance payment of income tax on specified transactions, contributing to government revenue while curbing tax evasion.
Commenting on the changes, Mr. Taiwo Oyedele, Chairman of the Tax and Fiscal Policy Committee, emphasized the need to simplify the tax process and reduce compliance burdens. The revisions aim to clarify requirements, streamline eligible transactions, and provide clear guidelines on applicable rates and remittance timing, ultimately enhancing transparency and efficiency in the tax system.
The implementation of these new regulations marks a significant step towards supporting economic growth through incentivizing innovation and rewarding academic excellence in Nigeria. As the country prepares to roll out these measures from October 1, 2024, stakeholders anticipate a positive impact on national development initiatives across key sectors.
