FG proposes 50% tax relief for companies supporting low-income workers

The Nigerian government has proposed a 50% tax relief for companies that increase wages or offer transport allowances to low-income employees, under a new legislative bill aimed at transforming the nation’s tax system.

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 to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” dated October 4, 2024, outlines multiple tax incentives intended to support businesses that prioritize employee welfare.

According to the bill, companies that raise wages, provide transport subsidies, or add transport allowances for employees earning N100,000 or less per month will be eligible for a 50% tax deduction on these expenses during the 2023 and 2024 assessment periods. Notably, salary increments for employees earning above N100,000 monthly will not qualify for this relief.

Read also

• Kwara boosts business environment for SMEs with SABER program
• Katsina launches N100m climate-smart agribusiness scheme for farmers
• Kwara Government rallies stakeholders to boost SME growth under SABER initiative
• Livestock minister urges Ecogold to build animal feed factory
• Ghana secures $367m from IMF, boosting economic stability

The bill also encourages companies to expand their workforce by offering similar tax benefits. Firms that show a net increase in employee numbers for 2023-2024 will be eligible for the deduction, provided the new hires are retained for at least three years and not involuntarily dismissed.

Furthermore, the bill proposes the introduction of an Economic Development Incentive Certificate as a tax benefit for companies undertaking capital investments. Businesses can apply for this certificate through the Nigerian Investment Promotion Commission (NIPC) with a non-refundable fee of 0.1% of the capital expenditure, up to a maximum of N5 million. Applications approved by the NIPC would then be forwarded to the Minister, who may recommend them for the President’s endorsement.

This proposed reform marks a significant shift in Nigeria’s approach to taxation, aiming to support both employee welfare and economic growth through incentives for corporate investments and job creation.