About 107 companies are currently benefiting from the federal government’s tax exemption.
This is contained in the fourth quarter (Q4) 2023 report on pioneer status incentive application published by the Nigerian Investment Promotion Commission (NIPC).
The pioneer status incentive (PSI) is a tax holiday that grants qualifying industries and products relief from payment of corporate income tax for an initial period of three years, extendable for one or two additional years.
The incentive, which is provided with three years of tax relief under the Industrial Development Income Tax Act, is widely recognised as an industrial measure meant to encourage economic investment.
According to the report, the number of beneficiaries enjoying pioneer status under the Industrial Development Income Tax Act increased from 83 in the first quarter (Q1) of 2023 to 107 firms by Q4 of 2023.
The 107 firms collectively invested over N2.49 trillion in 2023.
Amongst these firms that are beneficiaries of the PSI include manufacturing, solid material, pharmaceuticals, information and communication, trade, construction, waste management, electricity and gas supply, tourism, infrastructure, hotel development, agriculture, and others.
The report further revealed the requests of 79 firms were newly received, 211 firms were pending; and 56 companies had their applications approved in principle.
Also, 18 firms were granted incentive extensions — out of which, 13 have a three-year extension, while Honeywell Flour Mill and four others received two years extensions.
NIPC said: “Extension approvals are subject to the payment of application fees and only take effect after the payment of such fee.”
“Approvals-in-principle are subject to the payment of application fees and only take effect after the payment of such fees.
The companies that have benefitted include 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 Limited
Also on the list are 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 are 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, among others
Meanwhile, on December 14, 2022, the federal government said it was working on phasing out the “antiquated” pioneer status incentive and other tax exemptions for mature industries with the 2022 finance bill.
Also, Taiwo Oyedele, chairman of the presidential tax reform committee, on September 23, 2023, said the federal government would review tax waivers given to companies operating in Nigeria.
According to Oyedele, the incentives gulp N6 trillion every year.
He also said Nigeria has not been very “prudent and transparent” in granting tax waivers, adding that the tax reform committee is looking into the situation and will ensure tax collection is fair.
Also, on February 20, the senate committee on finance frowned on the N17 trillion loss incurred by the country on tax waivers within the last five years.
The committee also told the Federal Inland Revenue Service (FIRS) to suspend the tax waivers.
