Tax experts have emphasized the importance of Small and Medium Scale Enterprises (SMEs) paying close attention to documentation and agreements to ensure they avoid unnecessary tax liabilities.
This advice was shared during the first edition of the United Bank for Africa (UBA) Knowledge Series webinar, in the year titled “2024 Withholding Tax Regulations: Specific Emphasis on How They Affect SMEs,” held on Thursday in Lagos. At the event, experts discussed the implications of the new withholding tax regulations and provided insights on how businesses can navigate the evolving tax landscape to thrive in 2025 and beyond.
|
|
Speakers, Babatunde Ajayi, Head, SME Banking, UBA; Adeyemi Adeniran, Financial Analyst at Anderson Consulting; and Vincent Okoukoni, also a Financial Analyst at Anderson Consulting, shared practical insight and strategies for SMEs to comply with the new regulations while minimizing financial burdens and maximizing growth opportunities.
Explaining the fundamentals of the newly proposed withholding tax regulations, Adeniran noted that the updated system aims to address inefficiencies in the previous regime and ensure timely tax remittances to support government obligations.
|
|
|
|---|
“What this means is that while individuals and companies are required to pay their taxes at the end of the year, the government is saying, through withholding taxes, that it cannot wait until the end of the year to collect these taxes because it has immediate obligations,” Adeniran said.
“Therefore, as transactions occur between parties, the customer is required to withhold a portion of the tax and remit it to the government, rather than wait until year-end.”
Mr Adeniran explained further, “This regulation addresses the fact that, for the past few years, there have been no significant changes to the withholding tax mechanism, which has created certain challenges and inefficiencies.”
Stay Ahead with Premium Times
Follow us on Google News and never miss breaking stories, investigations, and in-depth reporting.
Add as a preferred source on Google
Highlighting the benefits of the 2024 withholding tax to SMEs, Mr Okoukoni elaborated, that businesses with an annual turnover of less than N25 million are exempted from tax deductions on payments received.
“For SMEs, the new regulations bring a significant benefit. If your business has an annual turnover of less than N25 million, your customers are not required to deduct taxes from the payments they owe you,” Okoukoni explained.
“This means you receive the full payment, which directly improves your cash flow. It’s a positive development for SMEs, as it allows them to retain more funds to support and grow their operations.”
Adeniran added that SMEs are expected to satisfy two key conditions, one of which is “It must be registered with the tax authority, and in any given month, the transaction amount should not exceed 2 million Naira.”
Head, SME Banking, UBA, Babatunde Ajayi, emphasized the bank’s commitment to supporting SMEs in light of the new withholding tax regulations.
“At UBA, we will continue to ensure SMEs get the needed support to thrive and soar, especially under the new withholding tax framework,” Ajayi stated. “SMEs are not just businesses; they are innovators and risk-takers who play a pivotal role in shaping the future of the continent.”
While speaking after the session, Group Head, Marketing and Corporate Communications, Alero Ladipo, commended the participants for sharing valuable insights and noted that the session will be an invaluable guide for SME’s and small businesses to the age the new tax regime effectively.
“At UBA, it is not just about banking; we are also passionate about helping our customers grow thriving businesses, and that is why we have launched this new series to increase the knowledge of our customers.”
United Bank for Africa is one of the largest employers in the financial sector on the African continent, with 25,000 employees group wide and serving over 45 million customers globally. Operating in twenty African countries and the United Kingdom, the United States of America, France and the United Arab Emirates, UBA provides retail, commercial and institutional banking services, leading financial inclusion and implementing cutting edge technology.
Discover more from Premium Times Nigeria
Subscribe to get the latest posts sent to your email.
More News
