The Federal Government has put forward a bill offering a 50% tax reduction to companies that increase wages or provide transportation allowances to low-income employees, as part of broader reforms to Nigeria’s tax system aimed at alleviating rising costs for lower-income earners.
The proposed legislation, 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,” specifies that companies paying employees a monthly gross income of N100,000 or less, or offering transportation subsidies, will be eligible for this tax incentive.
The bill states, “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.” This relief specifically targets companies supporting workers earning N100,000 or less. Furthermore, companies increasing their workforce through new hires in 2023 or 2024 are eligible for this benefit, provided these new employees remain with the company for a minimum of three years.
Additionally, the bill introduces the Economic Development Incentive Certificate, which grants tax benefits to companies investing in capital projects. Firms seeking this certificate must apply through the Nigerian Investment Promotion Commission (NIPC) with an application fee set at 0.1% of capital expenditure, capped at N5 million. Approved applications will be recommended by the NIPC to the Minister and may be submitted to the President for final endorsement.
This legislation reflects the Federal Government’s focus on stimulating economic growth through initiatives that promote job creation, workforce development, and capital investment.