Minister of finance, Mrs Kemi Adeosun has revoked the amendment reducing witholding tax for construction related activities.
The regulation was amended by the former minister of finance and coordinating minister of the economy, Dr Ngozi Okonjo-Iweala in 2014.
Okonjo-Iweala had amended the Companies Income Tax in order to reduce the withholding tax rate applicable to payments in respect of all aspects of building, construction, and related activities excluding survey, design and deliveries from five per cent to 2.5 per cent.
The move was seen then as a incentive by the Goodluck Jonathan government to reduce the burden of construction companies in Nigeria. According to Leadership newspaper, the policy became law into on Thursday, January 1, 2015 and was gazetted by the then government.
But Mrs Adeosun reverted the policy to five per cent based on recommendation from the Federal Inland Revenue Service (FIRS). The 2.5 per cent will however continue to be effective until the regulations are officially revoked via publication in the Federal Republic of Nigeria Official Gazette.
Earlier this year, FIRS set a revenue target of N4.957 which it plans to generate in 2016. The commission’s plan is line with the federal government’s plans to generate income from other sources due to dwindling international oil prices.
According to FIRS chairman, Dr Babatunde Fowler, the N4.957 trillion target for 2016 would be largely dependent on non-oil collection and in particular Value Added Tax (VAT) which will account for N2 trillion and Corporate Income Tax (CIT) expected to account for Nl.877 trillion.
Fowler is the former boss of the Lagos Inland Revenue Service (LIRS) where he was best known for improving the states internal revenue from N3.6 billion per month in January 2006 to an average of over N20.5 billion per month in 2014.
Meanwhile, economic experts say Nigeria would have lost N138 billion by the time activities resume today, July 8 after a three day break due to the Eid el-Fitr holiday declared by the federal government. The reason for this is there were scheduled treasury bills auction estimated at N94 billion, as well as N44 billion treasury bills maturity for the week, which the three-day break have put off.
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