The Nigerian government has introduced a bill that proposes a 50% tax relief for companies that increase salaries or offer transportation allowances to low-income workers. This bill aims to reform Nigeria’s tax system and provide income tax exemptions to incentivize salary adjustments.
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. Firms that hire new employees resulting in a net increase in their workforce between 2023 and 2024 will also qualify for the deduction, provided the new employees remain employed for at least three years and are not involuntarily disengaged.
Additionally, the government plans to introduce an Economic Development Incentive Certificate as a tax incentive for companies investing in capital projects.