The Federal Government through the new Finance Bill will exempt Small and Medium Enterprises (SMEs) with annual turnover below N25 million from paying Income Tax, the Minister of Finance, Budget and National Planning, Zainab Ahmed has stated.
According to the minister, the new Finance Bill, once signed into law, would protect small businesses and compel businesses with over N100 million annual turnover to pay 30 percent of their profit as Company Income Tax, while companies with a turnover between N25 million and N100 million will only pay 20 percent.
“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.
And we reduced the tax for medium-size businesses from 30 percent to 20 percent so they can have more resources than they can plow back in their business. These are the largest employers of labor.
The federal and state governments have a total labor force of less than one percent 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 formalize because they will see other businesses like them that are not registered to do 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,” Ahmed said.
Ahmed, however, said she was disappointed with Nigerians for focusing just on the Value Added Tax aspect of the bill.
She explained that the Finance Bill will help grow the real sector, enhance job creation and deepen economic productivity.