The Federal Government has unveiled plans for a significant tax relief aimed at companies that enhance salaries or provide transportation allowances to low-income employees.
This initiative, outlined in a recent legislative 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,” seeks to reform Nigeria’s tax system and stimulate economic growth.
According to the proposed bill, which was submitted to the National Assembly on October 4, 2024, companies will be eligible for a 50% tax deduction on costs associated with salary increases and transportation allowances for workers earning up to N100,000 per month.
The bill also incentivizes firms that expand their workforce, allowing them to benefit from the deduction if they hire new employees who remain with the company for at least three years.
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A section of the bill states: “A company shall be entitled to an additional deduction of 50% 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…; and (b) salaries of any new employee constituting a net increase in the average number of new employees hired.”
Additionally, the government plans to introduce an Economic Development Incentive Certificate as a further tax incentive for companies investing in capital projects.
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