During a recent online session for HR managers, payroll officers, CFOs, and tax professionals, Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, emphasized the importance of meeting these deadlines under the updated tax framework. The event, organized in partnership with the Joint Revenue Board, aimed to clarify how businesses and workplaces should implement the new Tax Reform Acts nationwide.
One notable change is that individuals and businesses benefiting from special tax incentives must now file a separate return disclosing those advantages. The Joint Revenue Board, which unites federal and state tax authorities, will oversee the process to ensure clarity and efficiency for taxpayers.
Oyedele highlighted that partners in business ventures must pay personal income tax to the state where they reside, rather than a central federal office. This adjustment ensures fairness by directing tax revenues to the states where people live and work. In a statement on his WhatsApp platform, he reiterated that personal income tax remains under state jurisdiction, with collaboration among agencies to streamline compliance.
The reforms also introduce protections for low-income earners. Workers earning the national minimum wage or less are automatically exempt from personal income tax. Even those slightly above the threshold may owe nothing after legal deductions, such as pension contributions and rent relief, are applied. For example, employees earning up to ₦100,000 monthly could see their tax burden reduced to zero after these adjustments.
To attract global talent, the tax system now exempts foreign companies from Nigerian taxes solely for having remote workers in the country. This change aims to boost competitiveness and investment.
Oyedele outlined a step-by-step guide for payroll managers: Start with gross income, add non-cash benefits, apply deductions (like pensions and health insurance), then factor in rent relief (capped at ₦500,000). The first ₦800,000 of income is tax-free, with progressive rates applied to the remainder. Though the top rate is 25%, most workers will pay far less due to these reliefs.
The overarching goal is a simpler, fairer tax system that supports workers while ensuring governments collect needed revenue. As the changes take effect, timely filing and understanding the rules will help avoid penalties and maximize benefits.
