FG exempts GenCos, DisCos, others from withholding tax

FG exempts GenCos, DisCos, others from withholding tax

The federal government has exempted all electricity companies, including Generation and Distribution Companies (GenCos and DisCos), from paying withholding taxes in the country.

This exemption is part of the new Withholding Tax regulation document signed by the Minister of Finance, Wale Edun. The document, which took effect from July 1, 2024, categorizes electricity and gas companies under “manufacturing” and “production,” thereby exempting them from Withholding Tax.

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Withholding Tax (WHT), introduced into Nigeria’s tax system in 1977, is an advance payment of Income Tax deducted at rates ranging from 5 to 10 percent, depending on the transaction type.

The Tax and Fiscal Policy Committee, led by Taiwo Oyedele, proposed the new regulation to simplify the tax system, address complexities, and ensure clearer compliance guidelines. Oyedele emphasized that while WHT has been crucial for government revenue and combating tax evasion, its expanding complexity necessitated reforms to streamline compliance and clarify applicable rates and remittance timelines.

FG exempts GenCos, DisCos, others from withholding tax