The Nigerian Investment Promotion Commission (NIPC) granted tax holidays to 12 companies in the first quarter of this year under the Federal Government’s Pioneer Status Incentive (PSI) initiative.
The Commission disclosed this in its Q1 2024 PSI report just released.
These new approvals brought the number of companies benefitting from the 3-year tax holiday to 104 at the end of the quarter.
According to the NIPC report, the 12 companies newly given tax holidays include Fouani Nigeria Limited; Neway Power Technology Company Limited; Starich Recycle Technologies Company Limited; Gerawa Rice Mills Limited; Shafa Energy Limited; Mafa Rice Mills Limited; A. A Rano Nigeria Limited (haulage); and A.A Rano Nigeria Limited (Natural gas supplier).
Others are Basma Agric Processing Limited; Flex Films Africa PVT Limited; Addmie Nutrition Limited; and Dufil Prima Foods Plc.
Approval in principle
In addition, NIPC said it also granted approval in principle to nine other companies, who will join the beneficiary companies after fulfilling certain conditions.
NIPC added that 18 new PSI applications were received in the first quarter of this year, while eight firms applied for an extension of their tax holiday, but only two were granted extensions.
Meanwhile, a total of 213 fresh applications for the tax holiday are still pending as of Q1 2024, according to the NIPC report.
Why the incentive?
While there have been debates around tax incentives and the substantial revenue loss attributed to annual waivers, the Head of Incentives Administration at the NIPC, Lovina Kayode, recently justified the waivers, noting that the incentives are strategically implemented to enhance foreign investments in the country.
She added that not all companies are granted tax breaks, as the commission adheres to rigorous procedures in awarding waivers. According to her, the incentive also aligns with the government’s commitment to fostering a conducive business environment and attracting investments.
“The pioneer status incentive is a stimulus that allows a company to get three years of not paying corporate income tax, just to get more investments.
“This process is stringent because our parent ministry and the federal inland revenue service are involved to ensure the right investors get this incentive,” she said.
What you should know
- A pioneer status incentive grants companies making investments in qualifying industries and products a tax holiday of three years from the payment of company income tax.
- The three-year tax holiday has the possibility of an extension for one or two additional years to enable the industry concerned to make a reasonable level of profit within its formative years.
- Last year, the NIPC said it approved tax holidays for a total of 34 companies.
- The Federal Government recently inaugurated a Joint Committee of staff of the NIPC and the Federal Inland Revenue Service (FIRS) to review the current guidelines for the administration of the PSI, validate the cost of the incentive to Nigeria, and recommend changes to the qualification and administration.
