The Finance Act 2025 Impact is significant, introducing a wide range of tax changes that impact both registered taxpayers and those operating informally. But when you look closely at the details, it’s clear that the incentives heavily favor those who choose to register and comply.
At Financia Global, we’ve analyzed the key provisions to help you understand who gains the most under this year’s reforms.
(I) Benefits for Registered Taxpayers
1. Lower Withholding on Property Purchases
Registered buyers listed on the Active Taxpayers List (ATL) will pay reduced withholding tax rates when buying property. Meanwhile, non-registered sellers will face higher withholding on their property sales.
2. Exemption Certificates for Companies
Public limited companies can now receive full exemption certificates from withholding tax, compared to the previous limit of 50%. This move offers significant cash flow relief for compliant, formally registered businesses.
3. Exemption on Sale of Long-Held Personal Property
Registered individuals who sell immovable property used personally for 15+ years can now claim a one-time withholding exemption. This disposal is also excluded from the Super Tax—an advantage unavailable to unregistered sellers.
4. Simplified Sales Tax for E-Commerce Sellers
Small sellers with a National Tax Number (NTN) selling through e-commerce platforms now benefit from a 2% final sales tax withholding—removing the need for sales tax registration entirely if they’re not Tier-1 retailers. This lowers compliance costs for legitimate small businesses.
5. Restored Exemptions for Charities
Certain non-profit organizations regain unconditional income tax exemptions, rewarding formal registration and compliance with clear regulations.
(II) Challenges for Non-Registered Persons
1. Increased Enforcement on Bank Accounts
Non-registered persons supplying taxable goods may face repeated suspensions of their bank accounts if they ignore registration notices. Continued non-compliance can even trigger restrictions on transferring immovable property.
2. Sales Tax Withholding Without Input Adjustment
Non-registered sellers using e-commerce channels face a final 2% sales tax withholding that cannot be offset against input tax—eroding their pricing competitiveness.
3. Higher Withholding on Property Sales
Non-registered property sellers will pay higher withholding tax rates on their sales transactions, making formal registration financially preferable.
4. Tighter Customs Compliance
Although some proposals were softened, stricter enforcement and documentation requirements will continue to target informal importers and traders.
(III) Softer Penalties for the Compliant
To balance stricter enforcement, the Finance Act 2025 also removed or softened several proposed penalties:
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The proposed fines for online marketplaces hosting unregistered vendors were withdrawn.
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Powers of arrest for tax fraud were rationalized, with safeguards added.
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Plans to give tax investigators police-style powers were dropped.
These changes reduce the compliance burden on registered businesses while keeping the focus on tackling deliberate evasion.
Conclusion:
The Finance Act 2025 Impact is clear in these changes, in 2025 and beyond, choosing to stay outside the formal system will be increasingly costly and risky. The new tax policy makes one thing clear: formal registration is the smarter choice for long-term growth and stability. Understanding the Finance Act 2025 Impact helps taxpayers plan better.
