In a bid to support the Micro, Small and Medium Enterprises (MSMEs), the federal government amended the Finance Act to reduce the tax burden on small businesses, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has said.
The minister made the disclosure at the Development Bank of Nigeria’s 3rd Annual Lecture Series Thursday in Abuja. The lecture series had as its theme: ‘Thriving in the Face of Domestic and Global Disruptions.’
According to the Minister, due to the disruption caused by the Covid-19 pandemic, the amendments were part of measures the government introduced to not only reduce MSMEs tax burden but also create opportunities for participation in export markets.
Some of the KY provisions the Minister noted included the amendment of section 40 of CITA granting tax exemptions to small businesses and lower the tax rate on the taxable profits of medium-sized companies to 20% – Section 16 of the 2019 Finance Act; granting of an initial tax holiday of four year to MSMEs engaged in primary agricultural production – Section 23 of the 2020 Finance Act; provision of tax exemptions on profits of small company; dividends received from small companies in the manufacturing sector for the first five years; dividends received from investments in wholly export-oriented businesses among others.
Mrs Ahmed listed policies introduced to support small businesses during the Covid-19 pandemic to include: N250 billion grant containing a N50 billion MSME de-risking facility component; payroll support scheme of up to N50,000 in monthly salaries for up to 10 staff of qualifying businesses for a duration of three months; one-off grant of N30,000 for 333,000 self-employed persons working as transporters and artisans under the Artisan and Transport Scheme; a N50,000 grant for 100,000 MSMEs; provision of financial backing up to N191 billion in loans to 34,144 MSMEs; and the capacity building of 125 MSMEs and loan guarantees for 1,748 businesses to the tune of N6.2 billion etc. In his welcome address, the Managing Director of Development Bank of Nigeria (DBN), Dr. Tony Okpanachi noted that with the global disruptions due to interconnectedness of economies, there is a compelling need for businesses to continue to innovate. He said that as the world gradually recovers from the disruptions caused by Covid-19, it is faced with a new reality as rising inflation, unstable exchange rates among others have had their effect on MSMEs in Nigeria.