On the 30th of September 2024, the Deduction of Tax at Source (Withholding) Regulations, 2024 (the “Regulation”) was published in the official gazette. Following the release of the Regulation, the Federal Inland Revenue Service (“FIRS”) immediately issued a Public Notice on the Regulation on the 2nd of October 2024. In July 2024, we published a newsletter when the Regulation was officially approved by the Federal Government of Nigeria, where we provided insights on the provisions of the Regulation and how the Regulation may impact businesses may impact businesses (see our previous publication here).

This newsletter outlines key changes and relevant updates in the recently published Regulation. Below are the key changes businesses should be aware of:

1. Exempted transactions

The Regulation has now added two new transactions to the list of those exempted from deduction of withholding tax at source. These exemptions are outlined in paragraph 10(1)(h) and (i) of the Regulation and include (i) telephone charges, internet data and airline tickets; and (ii) out-of-pocket expense that is normally expected to be incurred directly by the supplier and is distinguishable from the contract fees.

2. Commencement date

It is instructive that the effective date of the Regulation is 1st January 2025. This is now consistent with the National Tax Policy which recommends a 90-day implementation timeline for tax laws. As a result, the effective date for the implementation of provisions on activities such as lottery, gaming, reality shows has been changed from 1st October 2024 to 1st January 2025.

In addition, the Regulation specifies that the relevant tax authority may, with the approval of the Minister of Finance (where the circumstances warrant), prescribe modalities permitting early application of the provisions of the Regulation from 1st July 2024. This provision allows small businesses and key sectors such as energy and telecommunications, to take advantage of the exemptions in the Regulation before January 2025. These businesses and/or transactions can apply to the FIRS for a tax refund/credit where WHT has been deducted.

However, the FIRS’s Public Notice reiterates that the Regulation will take effect from 1st January 2025 and the existing WHT regime will continue until 31st December 2024. This clearly demonstrates the firm stance of the FIRS and indicates that early adoption of the Regulation’s provisions may be challenging for these businesses who may end up needing to seek the approval of the Minister of Finance or pursue legal redress.

3. Revocation

The Regulation revokes all existing regulations in respect of deductions at source or Withholding Tax, however, this does not invalidate the revoked regulations.

In conclusion, these updates reflect efforts to streamline tax administration and compliance, particularly for small businesses and low-margin sectors.

Please note that this newsletter does not constitute legal advice. Kindly contact the authors of this article if you have any questions or require any legal advice regarding changes that may affect your business in light of the revised WHT Regulation.

Clickhere to download Deduction of Tax at Source Regulations 2024 (Official Gazette)

Click hereto download the Public Notice WHT Regulations 2024

1. See section 11(1) of the Regulation.