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The Nigerian Investment Promotion Commission, on Monday, revealed that in the first quarter of 2024, 12 companies were newly awarded tax holidays under the Pioneer Status Incentive initiative, bringing the total number of beneficiaries to 104.
The companies granted tax holidays for an initial period of three years 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), A.A Rano Nigeria Limited (Natural gas supplier), Basma Agric Processing Limited, Flex Films Africa PVT Limited, Addmie Nutrition Limited, and Dufil Prima Foods Plc.
The report also indicated that these companies collectively invested N125.74bn in their operations and production. Additionally, the NIPC approved in principle nine other companies to join the beneficiary list after meeting specific conditions.
Furthermore, the commission received 18 new PSI applications in the first quarter of the year and granted extensions to two out of eight firms that applied for an extension of their tax holiday.
"The report indicated that approvals-in-principle are contingent upon the payment of application fees and only become effective after such fees have been paid.
The pioneer status, provided by the Federal Government, grants companies an exemption from paying income tax for a specific period, which can be either full or partial. This incentive, established under the Industrial Development Income Tax Act, offers tax relief for a three-year period and is generally seen as a measure to encourage investments in the economy.
Companies or products eligible for this pioneer status are those that are not already present in the country. As of Q1 2024, there are still 213 new applications for the tax holiday pending, as reported by the NIPC."
The Head of Incentives Administration at the NIPC, Lovina Kayode, recently defended the tax waivers, stating that they are strategically designed to encourage foreign investments in the country.
She emphasized that the commission follows strict procedures in granting waivers and that not all companies receive tax breaks.
Kayode highlighted that the incentives are in line with the government's efforts to create a favorable business environment and attract investments.
She explained that the pioneer status incentive allows companies to benefit from three years of not paying corporate income tax in order to attract more investments. Kayode also mentioned that the process is rigorous and involves the parent ministry and the federal inland revenue service to ensure that the right investors receive the incentive.
In response to the new approvals, Mr. Taiwo Oyedele, the Chairman of the Presidential Tax Reform Committee, stated that the new reforms would only cease the tax waivers once they are passed into law.
He clarified that the new law would not revoke the tax holiday enjoyed by companies as it goes against the committee's goal of attracting investments.
