Minister of Finance, Budget and National Planning, Zainab Ahmed, has said that the 2019 Finance Bill will exempt small businesses with turnover less than N25m from Companies Income Tax.
This is a change from the 30 percent tax currently being charged on all companies.
She said the new bill will ensure that companies earning between N25m and N100m annually will pay 20 percent of their income as tax, while those earning over N100m will continue to pay 30 percent.
The minister said, “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 a medium size business and begin to pay revenue.
“Our assessment is that any business that has a turnover of less than N25 million needs that break, not being taxed so they can invest in their businesses. And 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 business. 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.”
The bill is currently undergoing checks by Ministries, Departments and Agencies, and is expected to be signed into law in due time.