PwC MSME Survey 2020

S Key tax Considerations for SMEs The Finance Act 2020 has provided a fairly soft-landing for SMEs whose performance might have been more impacted negatively in the face. of the pandemic and recession. Here are ways to leverage the provisions made, to further propel business performance and stay afloat: Embrace tax technology 0000 Exemptions and restructuring Deductible tax costs Avoid penalties Stay informed SMEs and companies should leverage technologies to compute their tax and prepare their returns online. This would help simplify tax processes and prevent extra costs of late documentation and payment. Some state tax authorities now have digital platforms for filing taxes. Choose these over negotiations with unscrupulous tax officials who do not represent the intent of the government, Companies totally exempt from Companies Income Tax (CIT) could divert funds to strengthen their technology base and invest in research and development. Companies not entitled to CIT exemptions may choose to leverage exemptions from research and development. They can also disintegrate substantially different businesses where it is commercial to do so. The free carry forward of tax losses against future taxable profits is especially beneficial for startups who made substantial losses in the first few years of business. They may also request tax deduction for bad debts if possible. VAT registration is not mandatory for SMEs but there could still be irrecoverable VAT costs from procurement that hit your margins so voluntary registration may be considered. For the most part the VAT law will still need amendment to expand recoverable VAT especially now that the VAT rate has increased and to ensure Nigeria's VAT laws compare to other countries with higher rates. Ultimately, do not lose sight of VAT recoveries. Documentation is key to support tax deductions. MSMEs should pay attention to the increase in penalties of failure or late VAT registration as this may pose a threat to their profit where their returns are not filed on time. However, they may leverage extended payment period during the COVID-19 pandemic. There is a new wave of energy from the legislators and tax authorities to review the tax laws and increase revenues. Staying informed is critical. Take advantage of free seminars and fee paying business sessions that address business growth and provide updates on tax laws. The information gained Ican save you tax costs that could reduce margins and hamper growth. PwC MSME Survey 2020 PwC June 2020

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