Companies Income Tax (Exemption of profits Order)
The Minister of Trade and Investment, Mr Olusegun Aganga, on Thursday, 4 October 2012 announced the introduction of a new scheme of tax credit by the Federal Government. As part of the scheme, the President had issued a new Executive Order ("the Order") granting tax incentives to companies operating in Nigeria.
The order specifies three categories of tax relief as follows:
- Employment Tax Relief (ETR): ETR entitles employers who employ recent graduates and satisfy other criteria to an income tax exemption of 5% of its assessable profits or the amount of the gross salaries paid to the qualifying employees (whichever is lesser).
- Work Experience Acquisition Programme Relief (WEAPR): An employer with a minimum net employment of five new employees; who retains them for a minimum of two years is entitled to WEAPR. WEAPR affords such employer an income tax exemption of 5% of its assessable profits at the end of the second year of employment of the affected employees.
- Infrastructure Tax Relief (ITR): 30% of the cost incurred by Nigerian Companies in the provision of infrastructures or facilities of a public nature is now exempted from income tax.
This actions by the Federal Government are intended to reduce unemployment, boost private sector investment in the economy and also encourage companies to invest in the provision of public infrastructures or facilities. With the new law, employers have been given a financial incentive to employ graduates without work experience.