FIRS Launches New Withholding Tax System to Boost Revenue
By Patience Ikpeme
The Federal Inland Revenue Service (FIRS) has announced the commencement of a new withholding tax system aimed at streamlining tax collection, enhancing compliance, and increasing revenue generation for critical sectors.
The FIRS, in a statement released yesterday by Collins Omokaro, Special Adviser to the Executive Chairman on Communication and Advocacy, explained that the initiative mandates the deduction of taxes directly from payments such as salaries, rent, professional fees, and dividends. This shift in responsibility, from taxpayers to businesses and employers, is designed to ensure a consistent and reliable flow of tax revenue to the government.
The new regulation emphasizes the integration of Tax Identification Numbers (TINs) with all transactions, a crucial step in improving tax record-keeping and combating tax evasion. The FIRS has also introduced penalties for non-compliance to ensure adherence to the new system.
The FIRS acknowledged that the regulation may present challenges for some businesses, particularly small and medium enterprises, who may require additional support and guidance to navigate the new requirements. The FIRS also recognized the need for adaptation within specific sectors such as gaming and telecommunications to comply with the unique tax obligations outlined in the new rules.
Despite these potential challenges, the FIRS emphasized the significant benefits of the new withholding tax system. The agency projects that increased revenue generation will enable the government to fund essential public services, stimulate economic growth, and enhance the quality of life for Nigerians.
The FIRS has urged all stakeholders to cooperate and ensure the successful implementation of this critical reform. Omokaro stated, “The new regulation is a game-changer for Nigeria’s tax landscape. It will ensure that taxes are collected efficiently and transparently while fostering accountability among businesses and employers.” He further emphasized the importance of government agencies intensifying awareness campaigns to assist businesses, particularly SMEs, in understanding and complying with the new regulations.
The FIRS believes that this initiative will create a more equitable tax system where individuals and businesses contribute their fair share to national development. While challenges may arise during the initial implementation phase, the FIRS remains confident that through effective collaboration and ongoing support for businesses, the new withholding tax system will contribute significantly to the growth and development of the Nigerian economy.
