LAGOS, Nigeria (VOICE OF NAIJA)-A total of 107 companies, including industry giants Dangote and Mikano International, have been granted tax exemptions by the Federal Government.
This is coming up despite previous intentions to discontinue the programme by the federal government, recent findings have revealed.
According to reports obtained by The PUNCH, the number of beneficiaries enjoying Pioneer Status under the Industrial Development Income Tax Act increased from 83 in the first quarter of 2023 to 107 by the fourth quarter of the same year.
The Nigerian Investment Promotion Commission’s latest Pioneer Status Incentive (PSI) reports disclosed that while 79 firms submitted new requests, 211 applications are pending.
Additionally, 56 companies received approvals in principle, while 19 were granted incentive extensions until 2026
“Approvals-in-principle are subject to the payment of application fees and only take effect after the payment of such fees,” the report stated.
Under the Industrial Development Income Tax Act, the pioneer status exempts companies from paying income tax for a specified period to stimulate investments.
Notably, these tax reliefs are typically granted for a three-year period, although specific amounts granted to the companies were not included in the report, data from the Federal Inland Revenue Service revealed that approximately 71 companies enjoyed pioneer status incentives totaling N390.26 billion between 2021 and 2022.
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The investments made by the 107 benefiting companies during the year totaled N2.49 trillion.
These companies operate across various sectors, including manufacturing, pharmaceuticals, information and communication, trade, construction, waste management, and tourism.
Among the notable beneficiaries are Dangote Fertilizers, Mikano International Limited, Sinotrucks West Africa Limited, West African Cubes Limited, Jigawa Rice Limited, JMG Nigeria Limited, Rain Oil Limited, Okpella Cement Plc, Greenville Liquified Natural Gas Company LimitedMore included GZ Transport and Logistics Nigeria Limited, African Foundries Limited, Royal Pacific Group Limited, Kunoch Hotels Limited, Princess Medi Clinics Nigeria Limited, Medlog Logistics Limited, and Masters Liquefied Gas Company Limited.
Others included Aarti Rolling Mills Limited, Von Automobile Nigeria Limited, Ikorodu Steel Mills Limited, Confluence Metals Fabrication Company Limited, Cormart Nigeria Limited, Tiamin Rice Limited, Outsource Global Technologies Limited, Crown Flour Mills Limited, Elvis Hotels Nigeria Limited, Olam Hatcheries Limited, and several others.
Tax incentives have sparked controversy due to substantial revenue losses from annual waivers.
The Federal Government has unveiled plans to scrutinize and cut tax waivers for Nigerian companies, citing an estimated annual total of N6 trillion in incentives.
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Despite criticisms, commission officials argue that these incentives aim to bolster foreign investments within the nation.
The Chairman of the Presidential Tax Reform Committee, Mr. Taiwo Oyedele announced a forthcoming thorough review of tax waivers, aligning with the previous administration’s strategy.
Head of Incentives Administration, Lovina Kayode also emphasised that stringent procedures govern the granting of tax breaks, indicating that not all companies receive waivers.
She said, “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 make sure the right investors get this incentive.
“So far this year, we granted 34 applications have been approved and one of the things we intend to do is to ensure we are not just giving incentives to underserving companies. However, there is already a notion that Nigeria gives out too many waivers, incentives, and concessions.
“However, tax expenditure which means what government has lost by granting pioneers status incentive is just a small amount compared to what the country gains by granting these incentives to qualified companies.
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”She further revealed plans by the commission to publish impact reports on the effectiveness of the pioneer status report on job creation and other economic activities to promote investments.
“On impact, that is one thing NIPC is planning on, next year, it is one of our biggest tasks to do an impact assessment.
These incentives we gave out, how have they impacted the country in terms of job creation?
“How many jobs are the companies creating and what kind of import substitution has come about because we have granted these incentives and how much would the government gain after the three years of them not paying these taxes,” she added.
In a recent interview, economic experts emphasized the role of tax waivers in driving economic growth while raising concerns about the transparency and objectivity of the Federal Government in granting these waivers.
CEO of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, highlighted the importance of waivers aligned with tax policies and their necessity in encouraging investment and the establishment of pioneering businesses.
He stressed that incentives are aimed at economic growth, leading to employment and multiplier effects.
Dr. Yusuf emphasised the need for transparency in the process, positioning it as part of the government’s efforts to promote economic growth.