The federal government’s proposed new tax reforms aimed to legally exempt 95% of businesses and individuals operating in the informal sector from paying any tax.
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, disclosed this to journalists during the weekend on the sidelines of the close-out meeting of the Committee in Abuja.
Oyedele stated that the committee’s data-driven approach has led them to conclude that the informal sector comprises people simply trying to earn a legitimate living. As such, the reforms propose exempting 95% of this sector from all taxes, including withholding tax, company income tax and payroll taxes.
He added that government officials and elite would be squarely targeted for tax compliance going forward. The current tax exemption threshold for companies is N25 million in annual earnings, but Oyedele revealed plans to significantly raise this to account for inflation and support small businesses and low-income earners. He said, “so we’re using data to inform our decisions, currently if you earn N25million a year or less, you don’t have to pay company income tax, you don’t have to worry about VAT.”
