Withholding tax represents an advance payment on income tax liability deducted from source. This tax obligation constitutes a source of Government revenue while minimising the risk of tax evasion on the part of a taxpayer by shifting the responsibility of tax deduction from the income recipient to the payer.
The Deduction of Tax at Source (Withholding) Regulations, 2024 seek to establish rules governing the deduction of tax from payments made to taxable persons as identified by the various laws governing taxation in Nigeria, namely, the Capital Gains Tax Act, the Companies Income Tax Act, Petroleum Profits Tax Act, and the Personal Income Tax Act.
This represents a key step towards strengthening fiscal governance by easing tax compliance by relevant parties.
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