Top 9 Tax Changes in 2023 and 2024 That Nigerian Businesses Need to Know as at 10th July 2024

Top 9 Tax Changes in 2023 and 2024 That Nigerian Businesses Need to Know as at 10th July 2024. As we progress through 2024, Nigerian businesses must stay abreast of significant tax changes that could impact their operations.

These changes, designed to enhance tax administration, support economic development, and create a more business-friendly environment, require careful attention to ensure compliance and leverage available benefits.

Below are the key tax changes every Nigerian business should be aware of:

Top 9 Tax Changes in 2023 and 2024 That Nigerian Businesses Need to Know as at 10th July 2024

1. Deduction at Source (Withholding) Regulations 2024

The Federal Ministry of Finance has issued the Deduction at Source (Withholding) Regulations 2024 (the “Regulations” or “WHT Regulations”), which became effective on 1 July 2024, with specific rules for the gaming sector starting on 1 October 2024.

These Regulations introduce several changes to the Withholding Tax (WHT) regime in Nigeria. Key changes include adjustments to the rates and scope of WHT, clarifications on the treatment of certain transactions, and updated compliance requirements. The goal is to streamline WHT procedures, enhance compliance, and ensure more efficient tax collection.

2. Waiver of Value-Added Tax (VAT) on Gas and Gas Equipment

To foster the development and utilization of gas resources, the Federal Government has introduced a VAT waiver on gas and gas equipment.

This initiative aims to reduce the financial burden on businesses in the gas sector, making gas more affordable and accessible. It aligns with the government’s broader objectives of diversifying the energy mix and promoting cleaner energy sources.

3. New Updates to the VAT Filing Procedure on the TaxPro Max System

The TaxPro Max system, an online platform for tax filing and payment, has undergone updates to streamline the VAT filing process. These updates include improved user interfaces, enhanced security features, and more robust data validation checks.

The enhancements aim to make the VAT filing process more efficient, user-friendly, and secure, thereby improving compliance and reducing errors.

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4. Joint Audit and Investigation Framework Between FIRS and LIRS

A significant development in tax administration is the joint audit and investigation framework established between the Federal Inland Revenue Service (FIRS) and Lagos State Internal Revenue Service (LIRS).

This collaboration is designed to streamline tax audits and investigations, reduce duplication of efforts, and enhance tax compliance. Businesses can anticipate more coordinated and efficient audit processes, potentially reducing administrative burdens and ensuring more accurate tax assessments.

5. Postponement of Automated Collection of VAT on Imported Goods Bought Through Digital Platforms

The planned implementation of automated VAT collection on imported goods purchased through digital platforms has been postponed. This delay provides businesses and digital platforms with additional time to adapt to the new system.

The automated collection is intended to improve efficiency and compliance in VAT collection on e-commerce transactions, ensuring accurate VAT collection and remittance.

6. Fiscal Policy Measures 2023 (FPM 2023)

The Fiscal Policy Measures 2023 (FPM 2023) encompass a range of tax and fiscal reforms aimed at boosting economic growth, improving public finance management, and enhancing the overall business environment.

Key elements of FPM 2023 include adjustments in tax rates, the introduction of new tax incentives, and measures to combat tax evasion and avoidance. These policies are designed to create a more favorable environment for businesses while ensuring sustainable government revenue.

7. Treaty to Eliminate Double Taxation on Income, Capital, and Inheritance in ECOWAS Countries

Nigeria has entered into a treaty with other ECOWAS countries to eliminate double taxation on income, capital, and inheritance. This treaty aims to prevent individuals and businesses operating across ECOWAS member states from being taxed twice on the same income, capital gains, or inheritance.

It promotes cross-border trade and investment by providing tax relief and fostering economic integration within the ECOWAS region.

8. Issuance of Assessments to International Petroleum Tankers and Transport Vessels

A new policy mandates the issuance of tax assessments to international petroleum tankers and transport vessels operating in Nigerian waters.

This measure aims to ensure that these entities pay their fair share of taxes for the revenue generated from their operations within Nigeria. It is part of the broader effort to enhance revenue generation from the maritime sector, ensuring equitable tax contributions from all stakeholders.

9. Introduction of the Nigeria Customs Service Act, 2023

The new Nigeria Customs Service Act, divided into thirty-three parts and consisting of 282 sections, has been established to provide a comprehensive framework for customs and excise management.

The Act details the establishment, duties, responsibilities, powers, and competencies of the Nigeria Customs Service. Key definitions in the Act include audit-based control, certificate of origin, checking goods declaration, clearance, cost-based user fees, customs control zone, customs duties, customs law, physical and electronic examination of goods, preferential origin, risk management, temporary storage of goods, trans-shipment, and trader.

The Act outlines the duties and functions of the Nigeria Customs Service, including administering trade and fiscal policies of the government, promoting trade facilitation in line with international conventions and agreements, and collecting and accounting for revenue from customs duties, excise duties, charges, and fees.

Conclusion

These tax changes reflect the Nigerian government’s efforts to enhance tax administration, support economic development, and create a more business-friendly environment. Businesses operating in Nigeria should stay informed about these developments to ensure compliance and take advantage of available benefits.

Staying proactive and adapting to these changes will be crucial for businesses aiming to navigate the evolving tax landscape successfully.

By understanding and implementing these updates, Nigerian businesses can better position themselves for growth and sustainability in 2024 and beyond.

Olatunji Abdulrazaq CNA, ACTI

Founder, Taxmobile.Online