Nigeria is one of those countries where once anything goes up, it is never coming back down again.
Fuel prices, POS charges and my shoulders, now that I’ve learnt to do the tesumole dance (speak to my manager before you breathe around me, okay?)
So when news dropped that Nigerian companies which usually have had to pay 30% of their turnover as Companies Income Tax — an amount which can I just say, is dangerously close to 50 % …
Anyway, when news dropped that small companies would no longer have to shell out almost half of their turn over on Companies Income Tax, it was definitely something to wonder at. According to the Finance Bill of 2019, businesses with less than ₦ 25 million turnover will be exempted from paying CIT.
And we’re not making this up either. The Minister of Finance, Budget and National Planning – Zainab Ahmed confirmed it.
So here’s what you need to know:
- Turnover refers to the value of sales a business makes during a year and should not be confused with profit. Profit refers to a companies’ earnings after expenses have been taking out of sales earnings. Major key.
- Once the Finance Bill of 2019 is signed into law, companies that make a turnover of less than ₦ 25m will no longer be required to pay Companies Income Tax.
- Companies with a turnover of between ₦ 25m and ₦ 100 m however, will have to cough up 20% as CIT. A reduction from the prior 30%
- Companies earning over ₦ 100m will continue to pay 30% of their turnover as CIT because they are bigger boys and can afford to do so to a degree.
This move is to ensure that small businesses will be able to do more since they won’t have to lose sleep over the payment of Companies Income Taxes.
Don’t you just love this renewed ginger of the government towards businesses. Whoever is responsible for putting us on that Ease of Doing Business list, you try!
Now, we don’t know for sure when this bill will come into law, but if we’re to believe the Finance Minister, the National Assembly has already forwarded the bill to the president for assent, who in turn has sent a copy to the Ministries, Departments and Agencies to cross-check.
Less money to pay on tax, less problems. Amirite?