The federal government has said winnings from reality shows, lottery, games and all other programmes that promote entrepreneurship, academics, technology, and scientific innovation have been exempted from payment of withholding tax in a new set of financial regulations for the country.
Withholding Tax is a prepayment of Income Tax deducted at rates between 5 and 10 per cent, depending on the transaction type. It was first introduced in Nigeria in 1977.
The exemptions which are with effect from October 1, 2024.
Under the new regulations, winnings from such activities are exempt from the deduction of tax at source.
Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, announced these exemptions as part of a broader effort to stimulate innovation and academic excellence in Nigeria.
“Where a winning involves a series of payments, the net payout shall be determined at the end of a session, not exceeding one calendar month,” the new regulations say.
The exemptions, according to the government, are aimed at encouraging participation and investment in activities that contribute to national development in these critical sectors.
The net payout is calculated at the end of a session, which must not exceed one calendar month. This ensures that participants are taxed fairly and only on the actual net gains received.
The introduction of these tax exemptions is part of a broader regulatory framework outlined in the “Withholding Tax Regulations 2024.”
The regulations detail the processes and rates for tax deductions on various transactions, with these specific exemptions highlighting the government’s commitment to fostering a conducive environment for innovation and education.
