The Federal Government, as part of its economic stimulus plan, is considering a reduction in the income tax rates payable by Small, Micro and Medium Enterprises in the country.
The reduction in tax rates is part of the recommendations presented to the Minister of Finance, Mrs. Kemi Adeosun, by the 12-member committee to review the current National Tax Policy.
The committee, headed by Prof. Abiola Sanni of the University of Lagos, was given the assignment on August 10 and submitted its report to the minister on Thursday.
A statement from the ministry said the reduction in income tax rates for small-scale businesses would help to encourage more start-ups in the sector as well as boost the profitability of the existing ones.
The move is also expected to generate new jobs and make higher contribution to the Gross Domestic Product.
The statement read in part, “The committee noted that lowering the taxes payable by Small, Micro and Medium Enterprises would encourage compliance, promote the growth of SMMEs and expand the manufacturing base of the nation through their activities.
“Another recommendation suggested for implementation relates to the abolition of minimum tax, which results in loss-making companies been required to pay tax.”
The statement said the Finance minister assured the committee that a team would be set up to implement its recommendations through administrative measures without delay.
She added those that required legislation would be forwarded to the Federal Executive Council for consideration.
“We need to deal with legislation that need to be changed. Nigeria cannot afford to be running with antiquated tax laws,” Adeosun noted.
The committee also recommended the enactment of a number of amendments to the current tax legislation, including the one relating to the taxation of Real Estate Investment Trusts.
The committee’s recommendation read in part, “In other climes, a REIT is seen as a transparent or flow through entity that is not different and separate from its unit holders/investors.
“The income of the REIT is treated as the income of the unit holders or investors and therefore taxed at that level rather than the current provisions, which amount to double taxation.”
Earlier in his remarks, Sanni said that the report contained some innovations in terms of suggestions, including 20 implementation strategies.
“We believe that at the end of the day if the recommendations contained in this report are implemented, Nigeria will witness a transformation of the economy as a whole,” he concluded.
