The President Bola Tinubu-led Federal Government is introducing a 50 per cent tax relief for companies that increase salaries or offer transportation allowances to low-income workers, as part of a new legislative bill designed to reform Nigeria’s tax system.

The proposed law, titled “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” is dated October 4, 2024, and was obtained from the National Assembly.

A review of the bill on Friday indicated that it aims to introduce certain income tax exemptions to incentivise salary adjustments.

According to a section of the bill, companies will be allowed an additional 50 per cent deduction in their relevant years of assessment for costs incurred during the 2023 and 2024 calendar years.

The qualifying expenses include wage increases, transportation subsidies, or transport allowances granted to workers, whose gross monthly earnings are brought up to N100,000 or less.

The provision, however, stipulates that any additional salary increases granted to employees earning above N100,000 monthly will not be eligible for the tax deduction.

Also, firms that hire new employees resulting in a net increase in their workforce between 2023 and 2024 will qualify for the deduction, provided the new employees remain employed for at least three years and are not involuntarily disengaged.

A section of the bill read, “A company shall be entitled to an additional deduction of 50 per cent in the relevant years of assessment in respect of costs incurred in 2023 and 2024 calendar years on the following –

“(a) wage awards, salary increases, transportation allowance or transport subsidy granted to a low-income worker, which bring the gross monthly remuneration of the worker up to an amount not exceeding N100,000.00; provided that any additional award or salary increase to an employee earning above N100,000.00 as monthly salary shall not qualify for the additional deduction under this subsection; and

“(b) salaries of any new employee constituting a net increase in the average number of new employees hired in 2023 and 2024 calendar years over and above the average net employment in the 3 preceding years, provided that such new employees are not involuntarily disengaged within a period of 3 years post-employment.”

Also, the Federal Government plans to introduce an Economic Development Incentive Certificate as a tax incentive for companies investing in capital projects.

As outlined in the bill, firms seeking the certificate must submit their applications through the Nigerian Investment Promotion Commission, accompanied by a non-refundable fee of 0.1 per cent of the capital expenditure, capped at N5m.

The NIPC will review and recommend the applications to the Minister for approval, after which the Minister may forward the recommendation to the President.

Credit: punchng.com

Tinubu’s Govt Plans Tax Cut for Companies Raising Pay for Poor Workers

Comments (0)