FG exempts DisCos, GenCos, and others from paying withholding tax

All electrical companies, including generation and distribution companies (GenCos and DisCos), have been classified by the federal government as being free from paying withholding tax in the nation.

A copy of the newly revised withholding tax regulation paper, which was signed by Finance Minister Wale Edun, revealed this information to THE MATRIX on Sunday.

 The tax and fiscal policy committee, chaired by Taiwo Oyedele, recommended the new withholding tax rule, which went into force on July 1, 2024.

According to the document, the electricity and gas companies are categorized as “manufacturing” and “production”, therefore exempted from the withholding tax.

Under the Interpretation section of the document, it stipulates the following:

“In these Regulations, a word or an expression has the meaning assigned to it in the Act unless otherwise defined or where the context otherwise requires:

“the Act” means the Capital Gains Tax Act, Companies Income Tax Act, Petroleum Profits Tax Act, or the Personal Income Tax Act.

Across-the-counter transaction means any transaction carried out between parties without an established contractual relationship or any prior formal contracting arrangement and in which payment is made instantly in cash or on the spot via electronic mean

Connected persons shall have the definition under the Income Tax (Transfer Pricing) Regulations 2018

“Manufacturing” or “production” means the assembling of a final product or the making of a part or component of a product utilising raw materials or other inputs including labour and production overheads. For the purpose of these Regulations, the production of energy, including electricity, gas, and petroleum products shall qualify as manufacturing.”