By Sanya Adejokun
Senior Correspondent, Abuja

The Joint Tax Board (JTB) has told employers to commence immediate deduction of taxes from allowances of their staff for onward remittance to the Federal Inland Revenue Service (FIRS).

In a statement after the June 22, meeting of the JTB in Uyo, Akwa Ibom State, the board said contrary to widespread view, employees’ salaries and allowances are subject to tax in accordance with the provisions of the Personal Income Tax Act (PITA).

“All emoluments including all allowances of an employee should be taxed in accordance with the law,” its Executive Secretary, Mr. Adeleke Afolabi, said in the statement. He added that the clarification became necessary in view of various representations made to the JTB by individuals and employees on the issue.

Afolabi drew public attention to Section 3 of the Act, which says “any salary, wage, fee, allowance, or other gain or profit from employment, including gratuities, compensation, business, premiums, benefits or other perquisites allowed, given, or granted by any person to an employer”, is subject to tax.

According to him, what the law provides for are exemptions covered in Section 3 of what is taxed and what is not as contained in PITA.

These are medical and dental expenses incurred by an employee; rent paid, subject to the allowance limits; rent subsidy, which is subject to a limit of N100,000; transport allowance up to a limit of N15,000 per annum; meal subsidy up to a limit of N5,000 per annum; utility allowance subject to a limit of N10,000 per annum; entertainment allowance, subject to a limit of N6,000 per annum; and leave grant, subject to 10 per cent of annual basic salary.

He expressed worry that organisations’ managers and employers have either neglected to apply or defaulted in applying the law strictly, thus fuelling the impression that allowances are not taxable in Nigeria.