Small businesses with turnover less than N25million will be exempted from Companies Income Tax (CIT) once the Finance Bill 2019 is signed into law by President Muhammadu Buhari, according to Mrs. Zainab Shamsuna Ahmed, the Honourable Minister of Finance, Budget and National Planning.
She said once the bill is signed into law the President, companies that make a turnover of less than N25million will no longer pay the tax while those that have a turnover of between N25million and N100million annually will begin pay 20 percent as CIT.
Ahmed also said: “We reduced the tax for medium size businesses from 30 percent to 20 percent so that they can have more resources that they can plough back in their businesses. This is because they are the largest employers of labour. The federal and state governments have a total labour force of less than one percent of the population.”
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.”
In her words: “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 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 medium size businesses, and then they will begin to pay taxes, accordingly,” she also said.
Presently, all companies are expected to pay to the Federal Government 30 percent of their profit as CIT. But going forward, those earning over N100 million, according to her, would continue to pay the 30 percent of their profits as CIT.
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 (VAT) from five per cent to 7.5 percent.
