Nigeria | Tax Bill 2024 – Proposed Amendments
On October 3, 2024, President Bola Ahmed Tinubu
of Nigeria submitted the Tax Reform Bills to the National Assembly for review.
These bills aim to standardise tax procedures, ensuring a consistent and
efficient administration of tax laws to support easier compliance in line with
modern requirements.
The Tax Reform Bills include the Nigeria Tax
Bill, Nigeria Revenue Service (Establishment) Bill, Nigeria Tax Administration
Bill, and Joint Revenue Board (Establishment) Bill.
The Nigeria Tax Bill consolidates various
taxation laws previously governed under separate legislation into a single
comprehensive framework. As part of this effort, the Bill proposes repealing
key laws such as the Companies Income Tax Act, Personal Income Tax Act, Capital
Gains Tax Act, Petroleum Profits Tax Act, and Value Added Tax Act, along with
six other tax laws, while amending 13 additional laws.
Key proposed amendments
affecting payroll:
- Revision of Graduated Tax Rates for
Personal Income Tax Purposes: Section
58 and the Fourth Schedule to the Bill substitute the old graduating rates
with new graduating rates; thereby, exempting the N800,000 from
income tax on an annual basis.
New individual’s annual
income tax rates:
|
Annual taxable income in N |
Tax rate %
|
|
First N800,000
|
0%
|
|
Next N2,200,000
|
15%
|
|
Next N9,000,000
|
18%
|
|
Next N13,000,000
|
21%
|
|
Next N25,000,000
|
23%
|
|
Above N50,000,000
|
25%
|
Current individual’s annual
income tax rates:
|
Annual taxable income in N
|
Tax rate %
|
|
First N300,000
|
7%
|
|
Next N300,000
|
11%
|
|
Next N500,000
|
15%
|
|
Next N500,000
|
19%
|
|
Next N 1,600,000
|
21%
|
|
Above N3,200,000
|
24%
|
- Rent Relief replaces Consolidated Relief Allowance: The Bill replaces Consolidated Relief Allowance (CRA) with rent relief allowance. A taxable person shall be granted a rent relief of N200,000 or 20% of annual rent paid, whichever is lower and requires taxpayers to write to the relevant tax authority (RTA) before claiming any tax deduction. The requirement to write to the tax authority before a relief is claimed may create an additional tax burden for taxpayers.
- Exemption of Compensation and Damages from
Chargeable Gains: Section
50(1)(2) of the Bill provides that, sums not exceeding N50 million
obtained by way of compensation or damages for any wrong or injury
suffered by an individual in his person or in his profession or vocation,
including compensation for loss of office or employment, wrong or injury
for libel, slander or enticement shall not be chargeable gains. This means
that the sums not exceeding N50 million obtained as compensation or
damages for personal or professional wrongs or injuries shall not be
chargeable gains. Where the sum exceeds the N50 million threshold, only
the excess will be considered chargeable gains, for capital gains tax
(CGT) purposes. Currently, compensation for loss of office exceeding N10
million is subject to CGT.
The proposed effective date is 1 January 2025.
Further communication will follow to provide additional information once the
bill is enacted.
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