Nigerian Tax Reforms - Comparing personal income tax between the proposed and the present tax arrangement

Nigerian Tax Reforms - Comparing personal income tax between the proposed and present tax arrangement

Newly proposed tax bill 2024 for personal income tax 

• Up to N800,000: 0%
• N2.2 million: 15%
• N9 million: 18%
• N13 million: 21%
• N25 million: 23%
• Above N50 million: 25%

In contrast, 

The current tax rates on personal income 

• Up to N300,000: 7%
• N300,000 - N600,000: 11%
• N600,000 - N1.1 million: 15%
• N1.1 million - N1.6 million: 19%
• N1.6 million - N3.2 million: 21%
• Above N3.2 million: 24%

Analysis - Comparing between the new tax reform and the present tax arrangement

Comparing the two schedules reveals that:

• The new proposed bill exempts individuals earning N800,000 or less annually from income tax. 

• This is benefiting over 70% of Nigerians who earn below this threshold ¹. 

• This makes the bill pro-poor, as minimum wage earners will be exempt from personal income tax. 

Additionally, Section 13(2a) of the bill grants tax exemptions to employees of start-ups and technology-driven service providers, a significant incentive for youths in the ICT sector ¹ ².

Source:

Dissecting the Tinubu Tax Reform Bills (Part 1)