Nigerians receiving N30,000 per month as salary or income have been exempted from paying personal income tax, according to the new Finance Act 2020.
The latest Finance Act also stipulates that airline passengers using commercial flights will have their tickets exonerated from Value Added Tax.
A tax expert, Taiwo Oyedele, tweeted about the new development on finances and tax on Wednesday.
The Finance Act 2020, which was signed into law by President Muhammadu Buhari on December 31, 2020 and became effective from the first day of 2021 also clarifies that land and building are not taxable goods for VAT purposes. This means that there will be no VAT on transfer of land or acquisition of a house.
As shown in the Act, rent on both residential and commercial real property should not be burdened with payment of VAT.
“If you’re a low-income earner on N30,000 per month or less, you’re now exempted from personal income tax based on the new Finance Act,” Oyedele said. “So, tell your employer to stop deducting Pay As You Earn (PAYE) from your pay effective from this month.
“Effective 1st January, 2021, commercial flight tickets have been exempted from VAT. Next time you fly, cross check that you’re not wrongly charged VAT (and hopefully air fares should come down).”
If you’re a low income earner on N30k p/mth or less, you’re now exempted from personal income tax based on the new Finance Act. So tell your employer to stop deducting PAYE from your pay effective from this month.
Watch this space for more highlights of the new law.
— Taiwo Oyedele (@taiwoyedele) January 5, 2021
The Act also addresses other economic and financial activities, including operation of companies in free trade zones, import and export duties and agricultural production.
“For companies operating in the free trade zones, exemption from taxes is subject to compliance with tax filing and returns obligation to Federal Inland Revenue under section 55(1) of Companies Income Tax Act.
“You will no longer pay stamp duty on bank transfers but sorry you’ll now pay a new transaction levy called ‘Electronic Money Transfer’ (EMT) levy of N50 on transfer money in a bank or any financial institution on any account on sums of N10,000 or more,” he added.
However, a tax lawyer and expert, Mr Tunde Esan, said many employers would still be deducting personal income tax from their employees if there was no information circular issued by the respective federal and state revenue service.
He said, “The state and federal revenue services that collect the personal income taxes should issue an information circular in that regard.
“It is for the person taking the money to say stop paying as employers or as from today, do not deduct from this set of workers. This is because the employers won’t want to get involved; a lot of them will say until we get information circular, we won’t act on it
“The employer can say the law is not even clear to them, and they (government) need to clarify whether the N30,000 they are talking about is the gross earning or just the basic salary.”