The federal government has announced that companies that employ more staff will benefit from significant tax breaks. This incentive is part of broader efforts to boost employment and stimulate economic growth.
Wale Edun, Minister of Finance and Coordinating Minister of the Economy, revealed this during an interview on AIT. He stated that these tax breaks will be included in the forthcoming Inflation Reduction Act.“The Inflation Reduction Act will now contain a range of import duty exemptions, such as lowering of tariffs and outright tax breaks, for instance, for employment,” Edun explained. “If you employ more people, you will be given a tax break against it. So that range of fiscal incentives will also be laid out in an executive order, which Mr. President will in due course sign.”
The minister emphasized that the initiative aims to alleviate the increased operational costs that companies face due to fluctuations in the foreign exchange (FX) rate, particularly those that import, process, and add value to raw materials.
Edun also highlighted that the Value Added Tax (VAT) exemptions would be expanded. “Where we are on VAT is that a whole range of items from CNG to pharmaceutical products and so forth are exempt from VAT. It’s an executive order. I will sign it. It is currently with the Ministry of Justice,” he said.
Additionally, the minister mentioned that withholding tax would be removed for all manufacturing sectors, small and medium-scale enterprises, food production, and food processing companies. “Withholding tax, which essentially saves the working capital of companies, is removed for all manufacturing, many small and medium-scale enterprises, food production, food processing companies, a whole range. And it will be listed in an executive order, which I am also authorized to sign,” Edun noted.
Edun assured that the executive order would be finalized and released within the next one to two weeks. “I would say that in the next week or two it should be out. It has to go through certain regulatory, certain legal processes, but there is nothing holding it up except just the administrative processing, which we will ensure will be quick,” he concluded.
