The Federal Government has introduced a simplified and business-friendly withholding tax regime, as announced by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee.

The new regime aims to address the challenges of the existing system, which was established in 1977 to combat tax evasion and ensure a steady revenue flow. Over time, the system had become cumbersome, presenting several issues:

• Excessive compliance requirements for SMEs
• Strained working capital for low-margin businesses
• Ambiguities in compliance requirements, eligible transactions, and applicable rates

The reformed regime is designed to alleviate the burden on businesses and enhance compliance. While the full details are yet to be released, it is expected to provide clarity and relief to taxpayers, simplifying the process and making it more efficient.