The Federal Government has kicked-off the implementation of the 2024 Withholding Tax Regulations.

The new regulations, approved in July last year and put into the gazette in October, took effect on Thursday.

The revised regulations, titled: “Deduction of Tax at Source (Withholding) Regulations, 2024,” is intended to modernize the tax system, streamline compliance and address longstanding inefficiencies.

Announcing the commencement of the reforms on New Year’s Day, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, outlined key features of the updated regime.

He said Small and Medium Enterprises (SMEs) are now exempted from withholding tax compliance, adding that the change is expected to ease administrative and financial challenges for these businesses, fostering growth and innovation in the sector.

Also, businesses with low profit margins will benefit from reduced withholding tax rates, which will enhance their cash flow and reduce operational costs.

In addition, manufacturers and producers, particularly farmers, are now exempted from withholding tax. This move is designed to strengthen critical sectors, ensuring their sustainability and growth.

The tax provisions are intended to curb tax evasion, minimize avoidance opportunities, and promote transparency in tax remittances.