The Federal Government is considering reducing the income taxes payable by Micro Small and Medium Enterprises (MSMEs) in the country. This is to encourage more small business start-ups, boost the profitability of the existing ones, generate new jobs and make them contribute higher to the Gross Domestic Product (GDP).
The new incentives for SMEs are part of the recommendations presented on Thursday to the Minister of Finance, Kemi Adeosun, by the 12-member Committee set up by her last month to overhaul the nation’s tax policy.
The Committee chaired by Professor Abiola Sanni, recommended twenty action points in the new report which would still be reviewed by the finance minister before making it public.
The Committee noted, as part of its recommendations that lowering the taxes payable by Small, Micro and Medium Enterprises would encourage compliance, promote the growth of MSMEs and expand the manufacturing base of the nation through their activities.
Adeosun had in August initiated an overhaul of its tax policy which had bred multiplicity in tax process, complexities and also discouraged compliance by setting up a committee to work out possible solutions.
The overhaul is intended to particularly address aspects of the tax code and laws as required and also work out modalities for simplifying the processes and reducing the tax burden on small businesses.
The new Tax Policy further recommended the amendment of a number of legislation including the law on 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 recommended as against current provisions, which amount to double taxation.
Receiving the report, the finance Minister assured that a team would be set up by the Ministry to quickly begin implement the recommendations of the Committee through administrative measures, 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.
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,” Sanni pointed out.
