When signed into law, the Finance Bill 2019 will ensure that small businesses with turnover of less than N25 m are exempt from corporate income tax.

Both companies are currently expected to pay 30% of their income to the Federal Government as Company Income Tax.

Once the bill is signed into law, however, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said that companies making a turnover of less than N25 m will no longer pay this tax, while those with a turnover of between N25 m and N100 m annually will now pay 20% as corporate income tax.

She said those making more than N100 m will continue to pay the CIT’s 30% of their earnings.

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 taxes.

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.

“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.

Once the bill is signed into law, Ahmed said it had already been forwarded by the National Assembly to the President for consent, and the President had sent a copy to the ministries, departments and agencies to check the provisions.

She said it was saddening that Nigeria’s only aspect of the bill was the increase in Value Added Tax from 5% to 7.5%.

Justin Nwosu

Justin Nwosu is the founder and publisher of Flavision. His core interest is in writing unbiased news about Nigeria in particular and Africa in general. He’s a strong adherent of investigative journalism, with a bent on exposing corruption, abuse of power and societal ills.