Benefits In Kind (BIKs) is defined as an expense incurred by an employer for the personal benefit of employees and includes company cars, free or subsidized accommodation etc. For tax purposes, BIKs are deemed to be additional income accruing to the employees in the course of employment and are therefore taxable.
Any benefit, salary, wage, fee, allowance, compensation, bonus,
premium, or other perquisite enjoyed by an employee (whether temporary or
permanent) in Nigeria are subject to tax, and form part of the employees’ gross
emolument.
Under the Personal Income Tax Act, when an employer’s asset is enjoyed by an employee for his
personal benefit, the deemed value of such benefit accruing to the employee is
5% of the annual acquisition cost if known, or 5% of the market value of the
asset at the time of acquisition as determined by the revenue.
Furthermore, where the employee enjoys the benefits of assets
rented or hired by the employer, the employee shall be treated as being in
receipt of emolument on the amount incurred by the employer.
The implication of the above is that all such amounts as
determined thereof shall form part of employment benefits of the employee, and are taxable.
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