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Government to Offer Tax Incentives for Increased Employment

Published by admin on August 8th, 2024.

Government to Offer Tax Incentives for Increased Employment

The federal government has announced plans to provide tax incentives for companies that hire additional staff.

Tax incentives can include deductions, credits, exemptions, or exclusions that help reduce tax liabilities for individuals and businesses.

During an AIT interview on Tuesday, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, revealed that these incentives will be part of the Inflation Reduction Act.

“The Inflation Reduction Act will feature various benefits, including reductions in import duties and specific tax incentives related to employment,” Edun explained. “Companies that increase their workforce will receive tax breaks. These incentives will be outlined in an executive order, which will be signed by the President in due course.”

Edun noted that these measures are intended to address rising operational costs, particularly those driven by fluctuations in foreign exchange rates impacting businesses that import, process, and enhance raw materials.

He also mentioned that certain items, such as CNG and pharmaceutical products, will be exempt from VAT through an executive order currently under review by the Ministry of Justice. Furthermore, withholding tax will be eliminated for manufacturing, many small and medium enterprises, and food production and processing companies. This will also be formalized in an executive order that Edun is authorized to sign.

The executive order is expected to be issued within one or two weeks, pending regulatory and legal processes. “We anticipate its release shortly, as it is only waiting on administrative procedures,” Edun added.

In response to rising inflation, which reached 34.19 percent in June 2024 from 33.95 percent in May, the Central Bank of Nigeria’s Monetary Policy Committee increased the lending rate by 150 basis points to 26.75 percent on July 23.