The Federal Government is set to reduce the income tax rates payable by Small, Micro and Medium Enterprises (SMMEs) in the country to encourage more start-ups in Small, Micro and Medium Enterprises, boost the profitability of the existing ones, generate new jobs and make higher contribution to the Gross Domestic Product (GDP).
The new incentives for SMMEs are part of the recommendations presented to the Minister of Finance, Mrs. Kemi Adeosun, by the 12-member Committee she established, chaired by Professor Abiola Sanni, to review the current National Tax Policy (NTP) in Abuja, Thursday.
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 Minister assured that a team would be set up by the Ministry to implement the recommendations of the Committee through administrative measures without delay, while those that require legislations would be forwarded to the Federal Executive Council for consideration. “We need to deal with legislations that need to be changed. Nigeria cannot afford to be running with antiquated tax laws,” she emphasised.
The new Tax Policy has also recommended the enactment of a number of legislation amendments including the law to tax treatment the taxation of Real Estate Investment Trusts (REITs).
”In other climes a REIT is seen as 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,” the report clarified rather than the current provisions, which amount to double taxation.
Earlier in his remarks, the Chairman of the Committee, Professor Abiola Sanni said that the report contained some innovations in terms of suggestions, including 20 implementation strategies, explaining that some of the strategies required legislations while others could hit the ground running.
“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 pointed out.