The 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.
Text execpt headline courtesy Punch
