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Welcome to 2012! I hope you had a good holiday notwithstanding the New Year gift of fuel subsidy removal. As many of us may already know, the President on Tuesday 13 December 2011 while presenting the 2012 Federal Budget proposal to the joint session of the National Assembly confirmed that the Personal Income Tax ( Amendment) Bill has been signed into law. Based on the amendment dated, which is yet to be gazetted, we provide our comments on the changes below. Key changes · Introduction of a consolidated tax free allowance of N200,000 or 1% of gross income, whichever is higher, plus 20% of the gross income. Gross emolument (or income) is defined to include benefits in kind, gratuities, superannuation and any other incomes derived solely by reason of employment. · Principal place of residence redefined to include places where branch offices and operational site of companies are situated. Operational sites are defined to include oil terminals, oil platforms, flow stations, construction sites, etc with a minimum of 50 workers. · Revised graduated tax bands as shown below. Old Bands Old Rates New Bands New Rates First N30,000 First N300,000 Next N30,000 10% Next N300,000 11% Next N50,000 15% Next N500,000 15% Next N50,000 20% Next N500,000 19% Above N160,000 25% Next N1,600,000 21% Above N3,200,000 24% · Increase in minimum tax rate from 0.5% to 1% of gross income · Benefit in kind now specifically included in gross emolument and by implication taxable income · Temporary staff now specifically liable to tax. This will include casual workers, interns and other contract staff. · Reimbursements and expense claims still applicable as the relevant provision of the law was not deleted by the amendments. Also it cannot be argued that reimbursements (by their nature) are included in consolidated allowances. This means that employees will continue to enjoy tax free cost of.
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