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ON MISINFORMATION REGARDING TAXABLE INCOME & EXEMPTIONS IN THE NEW TAX LAWS
1. The tax exemption threshold is actually more than N800k stated in the new law which refers to taxable income meaning gross salary less deductions and rent relief.
2. You are only taxable on income after eligible deductions which have been simplified under the new laws. Deductions are available to both informal and informal sectors. The tax authority will only be interested in the flow of money through your account if you fail to disclose your income honestly.
3. Anyone earning N12m will pay less tax under the tax reform than they currently pay. Check here: https://fiscalreforms.ng/index.php/pit-calculator
4. In addition to the bottom 97% of Nigerians paying less taxes on their incomes, their essential consumptions are shielded from VAT including food, education, health, rent and transport.
5. Small businesses with turnover under ₦50m are exempt from company tax, VAT, withholding tax and PAYE tax on their staff who often earn below the income tax-exempt threshold.
6. Big firms get VAT refunds on their assets and other expenses for production of goods or services so they can reduce prices or at least have no reason to increase prices.
7. This reform is people-centric. It’s about lifting the burden off the low income earners and small businesses, reduce the tax burden on the average earners while only the high income earners (top 3% of all earners) will pay more. This is to ensure equity and make the tax system progressive. It also makes business formalisation attractive rather than punitive by closing the gap between the top marginal rate for high income earners and formal businesses.
Good morning, Nigeria.
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