In an effort to support low-income workers, the Federal Government has proposed a 50% tax relief for companies that raise salaries or provide transportation allowances to employees earning N100,000 or less per month. This measure is part of a newly proposed legislative bill aiming to reform Nigeria’s tax framework.
The bill, 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,” is dated October 4, 2024, and includes provisions to incentivize salary adjustments for low-income earners. Under this proposed law, companies that increase wages or offer transportation subsidies during 2023 and 2024 will qualify for the additional deduction on relevant expenses.
Only expenses that boost gross monthly earnings to N100,000 or less will be eligible, while raises for employees earning above this threshold will not qualify. Additionally, firms that increase their workforce during this period can also benefit, provided these employees remain employed for at least three years without involuntary termination.
Furthermore, the bill introduces an Economic Development Incentive Certificate, offering tax benefits for companies investing in capital projects. To apply, companies must go through the Nigerian Investment Promotion Commission (NIPC) with a non-refundable fee of 0.1% of the project’s capital expenditure, capped at N5 million. The NIPC will review applications and make recommendations to the Minister and, potentially, to the President for final approval.
