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…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

Details… Experts Simplify New Tax Regime For SMEs At UBA Knowledge Series

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, where 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.

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“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.”

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.”

Highlighting the benefits of the 2024 withholding tax to SMEs, 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.” Read More

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