As many people 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 14 June 2011, the key changes include introduction of a consolidated tax free allowance of N200,000 or 1% of gross income, whichever is higher, plus 20% of the gross income including benefits in kind, gratuities, superannuation and any other incomes derived solely by reason of employment.
Principal place of residence has been 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. Also, any individual irrespective of status who works in more than one state for at least 20 days in at least 3 months of every assessment year will be liable to tax in such states. Although the minimum tax rate was increased from 0.5% to 1% of gross income, the taxable income bands have been increased while the top tax rate was reduced marginally from 25% to 24%.