The Federal Government has proposed a legislative bill to reform Nigeria’s tax system, offering a 50% tax relief to companies that increase salaries or provide transportation allowances to low-income workers.
Titled “A Bill for an Act to Repeal Certain Acts on Taxation,” the proposed law aims to incentivize salary adjustments through income tax exemptions. Companies will receive an additional 50% deduction for costs incurred in 2023 and 2024, including wage increases and transportation subsidies, for workers earning up to N100,000 monthly.
As stated in the bill, “A company shall be entitled to an additional deduction of 50% in the relevant years of assessment…on the following – (a) wage awards, salary increases, transportation allowance or transport subsidy granted to a low-income worker…provided that any additional award or salary increase to an employee earning above N100,000.00 as monthly salary shall not qualify.”
Additionally, firms hiring new employees between 2023 and 2024, resulting in a net workforce increase, will qualify for the deduction if the new employees remain employed for at least three years.
The bill also introduces the Economic Development Incentive Certificate, offering tax incentives for companies investing in capital projects. Applications will be submitted through the Nigerian Investment Promotion Commission with a non-refundable fee.
