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Nigeria: Amounts paid to retired employees, exempt from PAYE tax

Nigeria: Amounts paid to retired employees

The Tax Appeal Tribunal, sitting in Enugu, issued a decision holding that amounts paid to retired employees (gratuities) were exempt from tax under the individual (personal) income tax measures and not subject to PAYE tax liabilities.

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The Abia State Board of Internal Revenue imposed additional PAYE tax liabilities on a company following a tax audit of the 2014 and 2015 tax years. The additional PAYE tax liabilities were related to amounts (gratuities) paid to retired employees by the company. The company asserted that the gratuities were not taxable under the individual income tax law because a decree in 1996 removed such gratuities from the list of chargeable (taxable) incomes and introduced a new exemption for all compensation paid with respect to “loss of office.”

The tribunal agreed, and held that the amounts were not subject to individual income tax and were exempt as PAYE tax liabilities.


Read a July 2019 report prepared by the KPMG member firm in Nigeria

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