In a bid to restructure Nigeria’s tax system and boost the income of low-earning workers, the Federal Government has proposed a new legislative bill that will offer a 50% tax relief to companies that increase salaries or offer transportation allowances.
The proposed law, which is dated October 4, 2024, and obtained from the National Assembly, aims to introduce certain income tax exemptions to incentivize salary adjustments.
According to the bill, companies will be allowed an additional 50% deduction in their relevant years of assessment for costs incurred during the 2023 and 2024 calendar years.
The qualifying expenses include wage increases, transportation subsidies, or transport allowances granted to workers whose gross monthly earnings are brought up to N100,000 or less.
However, any additional salary increases granted to employees earning above N100,000 monthly will not be eligible for the tax deduction.
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Also, firms that hire new employees resulting in a net increase in their workforce between 2023 and 2024 will qualify for the deduction, provided the new employees remain employed for at least three years and are not involuntarily disengaged.
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This move is expected to boost the income of low-earning workers and reduce the burden of taxation on companies that are willing to increase salaries or offer transportation allowances to their employees.
The Federal Government’s proposed tax relief is a welcome move, as it will encourage companies to increase salaries or offer transportation allowances to low-income workers.
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