LAGOS, Nigeria (VOICE OF NAIJA)–The Nigerian Investment Promotion Commission (NIPC) has granted new tax holidays to 12 companies in the first quarter of this year under the Pioneer Status Incentive (PSI) initiative, bringing the total number of beneficiaries to 104 companies.
This information was revealed in the NIPC’s Q1 2024 PSI report, which was made available on Monday.
The NIPC report indicates that 12 companies have been granted new tax holidays for an initial period of three years.
These companies 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).
Additionally, Basma Agric Processing Limited, Flex Films Africa PVT Limited, Addmie Nutrition Limited, and Dufil Prima Foods Plc are among the newly approved beneficiaries.
The report also noted that the companies have invested N125.74 billion in their operations and production.
Additionally, the NIPC announced that nine other companies received approval in principle and will become beneficiaries once they meet specific conditions.
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The NIPC further revealed that 18 new PSI applications were submitted in the first quarter of this year. Of the eight companies that applied for an extension of their tax holidays, only two were granted extensions.
“Approvals-in-principle are subject to the payment of application fees and only take effect after the payment of such fees,” the report stated.
The pioneer status is an incentive provided by the Federal Government that exempts companies from paying income tax for a specified period, either fully or partially.
This incentive, offered under the Industrial Development Income Tax Act, provides tax reliefs for a period of three years. It is designed to stimulate investments in the economy.
Eligible for pioneer status are products or companies that are new to the country.
As of Q1 2024, the NIPC report indicates that there are a total of 213 pending applications for tax holidays.
In April, The PUNCH reported that approximately 107 companies, including Dangote and Mikano International, currently benefit from tax exemptions from the Federal Government. The latest figure suggests that the commission has removed around 15 companies from this list.
Tax incentives have been a topic of debate due to the significant revenue loss resulting from waivers granted annually. Recently, the Federal Government revealed plans to review and reduce tax waivers provided to companies operating in Nigeria. It was disclosed that companies operating in Nigeria receive tax incentives worth N6 trillion annually.
Economic experts emphasized the role of tax waivers in fostering economic growth but questioned the transparency and objective rate of the Federal Government in granting tax waivers.
However, the Head of Incentives Administration at the NIPC, Lovina Kayode, recently justified the waivers, saying that the incentives are strategically implemented to enhance foreign investments in the country.
She added that not all companies were granted tax breaks, as the commission adheres to strict 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.
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Commenting on the new approvals on Monday, the Chairman of the Presidential Tax Reform Committee, Mr Taiwo Oyedele, said the new reforms would only stop the tax waivers when it is passed into law.
He added that the new law would not reverse the tax holiday being enjoyed by the companies as it does not go in line with the committee intention to attract investments.
Responding to a question posed by our correspondent, he said, “We are introducing the pioneer status incentive and they get incentives based on the investments they have made and not that they promised to do heaven and earth. They get pioneer status, don’t make any tangible investment and still do not pay taxes.
He said, “The rules we have drafted with respect to whatever exemption you get at the time our laws are enacted will respect it, if it is three years, you would enjoy the tax holiday. We are talking about the country; three to five years is not the end of the world.
“If we reverse anything that has been granted, that’s a contradiction to what we stand for. whether we agree to the process is a different conversation but anyone that gets pioneer status would be allowed to run the course of that tax holidays but once our laws are enacted, you won’t be able to get fresh ones and run down the existing ones. A representative of the NIPC is on our committee, and we believe they would do their work responsibly.”