Small businesses in Nigeria have a new offer as the government has listed new palliatives aimed at subsidising the cost of doing business in the country. According to Nigeria’s federal government, the new set of palliatives will help Micro Small and Medium Enterprises (MSMEs) to survive the economic fallouts of the coronavirus pandemic in Nigeria.
“This is our moment and the government of Nigeria and its regulatory agencies are prepared to back MSMEs and other businesses that are prepared for the innovative and interesting times that lie ahead of us”, Nigeria’s Vice President Prof. Yemi Osinbajo said at the unveiling of the new measures.
Here Are The Palliatives
- By the terms of the new measures, the government will give 80 percent discount to all MSMEs that registered their product on the electronic platform of the National Agency for Food and Drug Administration (NAFDAC). This new discounted rate will run over a period of six months.
- The platform code-named NAFDAC Automated Product Administration and Monitoring System (NAPAMS), is a software solution for the regulation and control of the importation, exportation, manufacture, distribution, advertisement, sale and use of foods, drugs, cosmetics, medical devices, chemicals, detergents and bottled water in Nigeria.
- Other incentives include zero tariffs for the first 200 micro and small businesses to register on the e-platform and waiver on administrative charges for overdue late renewal of expired licenses of micro/small businesses products for a period of 90 days.
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Nigeria Has Previously Waived Tax Payment For Its Small Businesses Under Its New Finance Law
Under Nigeria ‘s new Finance law:
- Small businesses with annual turnover of less than N25m will now be exempted from Companies Income Tax. However, to benefit from such incentive, such small businesses must first register for taxation in Nigeria and must continue to file tax returns during the period their profits are below the tax N25mn threshold.
- A lower Corporate Income Tax rate of 20% ( as against 30%) will however apply to medium-sized companies with turnover between N25m and N100m, to benefit from such incentive, they must first register for taxation in Nigeria and must continue to file tax returns during the period their profits are between the N25m and N100m threshold.
- The law now allows a minimum tax rate of 0.5% for every turnover and this provision will only apply to small companies (less than 25m turnover), thus allowing non-resident companies in Nigeria to pay minimum tax.
- For companies or businesses that pay their tax dues early, a 2% deduction bonus on tax payable is given in the case of medium-sized companies between N25m and N100m and 1% deduction on payable tax is given for large companies from N100m and above.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.