Friday, December 4, 2020

FG may reduce minimum tax rate next year

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The draft Finance Bill 2020 contains a proposal for the reduction of the minimum tax rate to be paid by companies next year in light of the current economic climate.

The Fiscal Policy Reforms Committee, noted that the Finance Act 2019 changed the basis for computing minimum tax to 0.5 per cent of the gross turnover of the company.

Minimum tax is payable by companies having no taxable profits for the year or where the tax on profits is below the minimum tax.

However, companies in the first four calendar years of business, companies engaged in the agriculture business, or small companies are exempt from minimum tax.

According to the committee, there is also a proposal to modify the definition for gross turnover.