Some Salary Earners Will Not Pay Personal Income Tax – FG
The Federal Government has announced that certain categories of income earners will be exempt from paying personal income tax. This exemption applies to workers in both the public and private sectors, as well as self-employed citizens.
Taiwo Oyedele, Chairman of the Presidential Committee on Tax Reform, made this announcement while discussing the new Withholding Tax Policy during the AIT Money Line programme on Tuesday. He explained that the policy aims to alleviate economic hardship for small businesses and households.
Oyedele disclosed that Nigerians earning more than five million naira per month would face higher taxes, whereas businesses with a turnover of up to ₦25 million would be exempt from withholding tax, with plans to increase this threshold to ₦50 million through the National Assembly.
“In the new withholding tax regulation, we have created exemptions for small businesses. They do not have to worry about withholding tax if their turnover is within ₦25 million. We are trying to raise that to ₦50 million. We have drafted a report on that and it will get to the National Assembly very soon,” Oyedele said.
He further explained that the tax exemptions extend to income earners, including employees in the organized private sector, public sector, and self-employed individuals. The proposal suggests that those earning below a certain threshold should not pay personal income tax to help support their households.
“Our proposal is if you earn a certain amount of income, you should not have to pay any tax in terms of personal income tax because you need to take care of your household, which by data, the average is about five. You need to think about what two people (husband and wife) must earn to take care of five people,” he added.
Oyedele also clarified that the increase in the minimum wage did not affect the new tax policy. The Presidential Committee on Tax Reform considered the new minimum wage, prioritizing poor households and multidimensionally poor Nigerians by removing taxes that affect essential items such as food and health.
“We factored in the minimum wage. Even beyond the minimum wage, we think that people who earn more than the minimum wage should see their tax burden decrease because the cost of living has gone up. People who are not poor and make a lot of money—if you make more than five million naira a month—you pay more because we have to fund the basic needs of those at the lower end. We have reduced taxes on basic consumption items like food and health to protect businesses and households, including those who are multidimensionally poor,” he concluded.
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