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FG Introduces 50% Tax Relief, To Raise Wages, Support Low-Income Workers

Published

4 weeks ago

Oct 26, 2024.

The Federal Government has proposed a 50% tax relief for companies that increase salaries or provide transportation allowances to low-income employees, as part of a comprehensive tax reform bill aiming to simplify Nigeria’s tax laws.

The draft law, titled “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation,” seeks to support workers earning up to N100,000 per month by incentivizing salary adjustments and transport benefits.

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EKO HOT BLOG reports that under the bill, companies may claim a 50% tax deduction on relevant expenses incurred in 2023 and 2024, specifically for wage increases and transport subsidies for low-income workers.

The tax relief extends to companies that increase their workforce, provided new employees remain with the company for at least three years without involuntary termination.

However, the provision excludes salary increases for employees with monthly earnings above N100,000.

Additionally, the Federal Government plans to introduce an Economic Development Incentive Certificate to encourage corporate investments in capital projects.

Tax Relief

To qualify, companies must apply via the Nigerian Investment Promotion Commission (NIPC), including a non-refundable fee equivalent to 0.1% of the capital expenditure, capped at N5 million.

The NIPC will evaluate and recommend qualifying applications to the Minister for approval, who may further escalate the recommendation to the President.

These initiatives come amid broader discussions around tax policy adjustments, including potential new taxes on telecom services and exemptions on baby products, as the government seeks to create a more balanced tax system while encouraging economic growth and job creation.