Tax experts and business leaders have offered critical insights on how small and medium enterprises (SMEs) can manage their tax obligations as they grow into larger corporations.
The experts and business leaders underscored the importance of transparency, compliance, and leveraging available resources to ensure smooth growth.
This was discussed in a webinar organised by UBA as part of its ‘UBA Knowledge Series’ program.
Renowned leaders from the tax and business industry, including UBA’s Head of SME Banking, Babatunde Ajayi, Senior Manager, Andersen Nigeria, Vincent Okoukoni, and Partner, Andersen Nigeria, Adeyemi Adediran were on ground to share their insights and explain how businesses can thrive in the new tax regime.
The panelists emphasized the importance of honesty and compliance. “When your business grows, you must notify the relevant authorities to update your tax obligations. This includes informing them about changes in revenue, profit margins, or operational structure.”, Adediran stated.
The panel also highlighted that different governments have varying requirements, especially when operating across multiple regions.
For instance, some West African countries like Ghana and Kenya have implemented systems encouraging businesses to transact freely while complying with tax laws.
Automation plays a significant role in reducing errors and ensuring timely remittances, which helps maintain compliance. As one expert noted, “Automation is essential to reduce mistakes and streamline processes.”
According to the panelists, as an entity grows, it must be registered appropriately with the relevant tax authorities. This ensures the government is aware of the company’s current status and applies the correct tax rates.
Failure to register or notify the government could result in penalties or legal complications down the line. One panelist stressed, “Being compliant means being proactive. You need to do the right thing and not cut corners.”
A critical point discussed was the threshold for monthly revenue. If a company exceeds 25 million units in monthly transactions, it may trigger additional tax obligations.
However, if the transaction amount is below this threshold, the supplier may qualify as a small company, potentially benefiting from lower tax rates or exemptions.
Adediran explained “Even if your transaction is less than 25 million, you still need to understand what the requirements are”.
Even during months where a company does not make a profit, it may still be required to fulfill certain tax obligations.
The panel stressed the importance of transparency in reporting all transactions, regardless of profitability.
Certain sectors, such as agriculture and health services, may benefit from specific tax exemptions or reduced rates. These exemptions are designed to support industries contributing significantly to economic growth and social welfare.
However, businesses must still meet their basic tax obligations and ensure their financial records are accurate and up-to-date.
“If you can access your financial records, you can clearly show which company has the right to pay taxes,” Adediran explained.
The conversation also touched on withholding taxes, particularly for businesses acting as intermediaries in transactions.
The panelists called on governments to provide adequate support and resources to help businesses navigate the complexities of tax regulations.
This includes offering training programs, simplifying tax filing processes, and introducing automation tools that reduce the likelihood of errors.
“We’re here to assist SMEs every step of the way,” said one tax authority representative. “Our goal is to ensure businesses can focus on what they do best—growing and creating value—without being bogged down by unnecessary red tape.”, Adediran stated.
