Micro, small and medium enterprises with an annual turn-over less than 25million naira will be exempted from paying company income tax, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has disclosed.
This is part of the provisions of the new Finance Bill yet to be signed into law. The Minister said the new development is as a result of the ministry’s assessment of small businesses needing “that break” in order to invest properly in their businesses.
Zainab revealed that companies with annual turn-over of between 25m-100m will pay 20% CIT, she said “…we reduced the tax for medium-size businesses from 30 per cent to 20 per cent so they can have more resources that they can plough back in their businesses. These are the largest employers of labour. The federal and state governments have a total labour force of less than one per cent of the population.”
“Not only will small businesses be able to do more because they are not paying taxes, but we are also working together with the trade authorities to also encourage people in the informal sector to become formalised 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 a medium-size business and begin to pay taxes.”
While the bill is yet to be passed, companies are still expected to pay 30% CIT to the Federal Government.