The Federal Government has stated that it is introducing a 50 percent tax relief for companies that increase salaries or offer transportation allowances to low-income workers, News About Nigeria reports.
The government disclosed this during a review of the bill on Friday, stating that it is part of a new legislative bill designed to reform Nigeria’s tax system.
The government also stated that the bill aims to introduce certain income tax exemptions to incentivise salary adjustments.
According to a section of the bill, companies will be allowed an additional 50 per cent 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.
The provision, however, stipulates that any additional salary increases granted to employees earning above N100,000 monthly will not be eligible for the tax deduction.
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.
The bill reads, “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 calendar years on the following:
“(a) wage awards, salary increases, transportation allowance or transport subsidy granted to a low-income worker which bring the gross monthly remuneration of the worker up to an amount not exceeding N100,000.00; provided that any additional award or salary increase to an employee earning above N100,000.00 as monthly salary shall not qualify for the additional deduction under this subsection; and
“(b) salaries of any new employee constituting a net increase in the average number of new employees hired in 2023 and 2024 calendar years over and above the average net employment in the 3 preceding years, provided that such new employees are not involuntarily disengaged within a period of 3 years post-employment.”
