The Federal Government has proposed a 50% tax cut for companies that increase wages or provide transportation subsidies to low-income employees.
This incentive, detailed in a bill from the National Assembly, aims to reform Nigeria’s tax system and support lower-income earners amid rising costs.
According to 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,” companies that raise salaries to a monthly gross of N100,000 or less or offer transportation allowances will qualify for the deduction.
“A company shall be entitled to an additional deduction of 50 per cent in the relevant years of assessment in respect of costs incurred in 2023 and 2024,” the bill states.
However, this relief is limited to workers earning N100,000 or below. Additionally, companies that expand their workforce with new hires in 2023 or 2024, leading to a net employment increase, will also qualify, provided the new hires remain employed for at least three years.
The Federal Government is also introducing an Economic Development Incentive Certificate, which offers tax benefits to firms investing in capital projects.
Companies must apply for this certificate through the Nigerian Investment Promotion Commission (NIPC). Applications are subject to a 0.1% fee on capital expenditures, capped at N5 million.
Applications approved by the NIPC will be recommended to the Minister and potentially forwarded to the President for final approval.
This bill underscores the government’s commitment to fostering economic growth through job creation and workforce support initiatives.