The Federal Government has approved the reduction of Withholding Tax on building, construction and other related activities in the economy from five per cent to 2.5 per cent.
This move by the government is a part of its efforts to reduce fiscal burden on investors involved in the aforementioned activities and other related activities in the economy.
The relief, which is based on amendment of Schedule to the Companies Income Tax (Rates, etc., of Tax Deducted at Source (Withholding Tax)) Amendment Regulation, which represents a 100 per cent slash from the old applicable rate, became effective on January 1 2015.
However, this slash does not apply to survey, design and deliveries.
Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo-Iweala, had recently issued an official gazette for the Amendment of the Schedule in furtherance of government’s efforts to remove fiscal and other constraints impeding the sectors’ growth.
PriceWaterHouseCoopers, PWC, one of the leading consulting companies on finance, taxation and other fiscal matters, in a tax alert issued on Monday, February 23, indicated that the minister signed an amendment to the existing regulation on 17 December, 2014.
According to PWC,the amendment reduces the rate of withholding tax on all aspects of building, construction and related activities (excluding survey, design and deliveries) to 2.5 per cent.