The Minister of Finance, Budget and National Planning, Zainab Ahmed has said that the Finance Bill 2019 when signed into law, will exempt small businesses with turnovers below N25m from paying the 30 per cent income tax prescribed in the Companies Income Tax Act.
However, companies with turnovers between N25m and N100m yearly will pay 20 per cent, while companies earning over N100m will continue paying the prescribed 30 per cent.
According to the minister, the decision to exempt small medium businesses from paying the company income tax is to assist in increasing productivity and profit in their businesses. It will also encourage unregistered businesses to get registered.
She said,
“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 formalised because they will see other businesses like them that are 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 medium-size businesses and begin to pay taxes.”
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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 that they can have more resources that they can plough back into their businesses.
“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.”
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