Emphasis of the finance act on the nigeria tax system and the company Income Tax
The emphasis of the Finance Act on the Nigerian tax system and payment, particularly for companies, is to improve the ease of doing business in Nigeria by reducing the tax burden on small and medium-sized enterprises (SMEs) and promoting investment in the country. The act provides tax incentives for companies that invest in infrastructure and capital markets, and it also exempts small companies with a gross turnover of less than N25 million from paying income tax. Additionally, the act introduces new provisions to the tax code that aim to address issues of tax evasion and aggressive tax planning. Overall, the Finance Act seeks to create a more conducive business environment in Nigeria by reducing the compliance burden on businesses, encouraging investment, and increasing revenue collection for the government.
According to the act the companies are classified into small, medium and large companies and also the application of tax especially CIT?
he Finance Act 2019 introduced a new classification system for companies in Nigeria based on their annual gross turnover. The three categories are small, medium and large companies.
Small companies are those with an annual gross turnover of N25 million or less and are exempted from paying Company Income Tax (CIT). Medium companies are those with an annual gross turnover between N25 million and N100 million and are taxed at a reduced CIT rate of 20%. Large companies are those with an annual gross turnover of over N100 million and are taxed at the standard CIT rate of 30%.
The Finance Act also introduced other measures aimed at promoting small and medium-sized enterprises (SMEs), such as the exemption of minimum tax for companies with less than N25 million annual turnover and the reduction of tax rates for micro-companies. Additionally, the Act simplified tax compliance requirements and introduced penalties for non-compliance to encourage voluntary tax compliance.
Author: Muhammad T.
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