Federal Government Implements New Withholding Tax Regulations to Modernize Nigeria’s Tax System

The Federal Government has officially implemented the 2024 Withholding Tax Regulations, marking a significant step toward modernizing Nigeria’s fiscal landscape.

Effective January 1, 2025, these regulations aim to streamline tax compliance, enhance transparency, and reduce administrative burdens on businesses.

The revised framework, titled Deduction of Tax at Source (Withholding) Regulations, 2024, was approved by President Bola Tinubu in July 2024 and later published in the Official Gazette in October. The updates particularly focus on supporting Small and Medium Enterprises (SMEs), manufacturers, and agricultural stakeholders—key drivers of Nigeria’s economic growth.

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, announced the implementation via his X handle, emphasizing the transformative features of the policy. Among these, SMEs are exempt from withholding tax compliance, and businesses in low-profit sectors benefit from reduced tax rates, alleviating financial pressures.

The regulations also simplify the process of obtaining tax credits for deductions at source, streamline definitions, and eliminate timing ambiguities, addressing long-standing challenges faced by taxpayers.

With an added focus on combating tax evasion, the reforms aim to create a transparent and efficient tax environment. Industry observers have praised the changes, noting that they not only provide relief for small businesses but also promote fairness across Nigeria’s tax system.

These measures align with broader fiscal reforms aimed at addressing inequities and fostering economic resilience as Nigeria charts its course for sustainable development.