The Federal Government acting through the Nigerian Investment Promotion Commission has awarded new tax breaks to 12 companies in the first quarter of this year, under the Pioneer Status Incentive initiative, bringing the total number of beneficiaries to 104 enterprises.
This was disclosed by the commission in its Q1 2024 PSI report released on Monday, according to The Punch.
The pioneer status is an incentive offered by the Federal Government, which exempts companies from paying income tax for a certain period. This tax exemption can be full or partial.
The products or companies eligible for this pioneer status are those that do not already exist in the country.
The NIPC report lists the 12 companies that will receive tax breaks for the first three years: Fouani Nigeria Limited, Neway Power Technology Company Limited, Gerawa Rice Mills Limited, Shafa Energy Limited, Mafa Rice Mills Limited, A. A. Rano Nigeria Limited (natural gas supplier), and A.A. Rano Nigeria Limited (haulage).
Others are Basma Agric Processing Limited; Flex Films Africa PVT Limited; Addmie Nutrition Limited; and Dufil Prima Foods Plc.
According to the report, the enterprises had invested N125.74 billion in their operations and production.
In addition, NIPC said it also approved in principle nine other companies, that will join the beneficiary companies upon meeting specific requirements.
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.
According to NIPC, in the first quarter of this year, 18 new PSI applications were received. Additionally, eight enterprises requested an extension of their tax waiver, but only two of those requests were approved.
“Approvals-in-principle are subject to the payment of application fees and only take effect after the payment of such fees,” the report stated.
Tax incentives have been a divisive topic because of the significant amount of money lost to annual waivers. Recently, the Federal Government of Nigeria revealed its intentions to review and cut back on tax breaks granted to businesses that operate in Nigeria, stating that businesses with operations in Nigeria were given yearly tax breaks of N6 trillion.
Although tax waivers are a key factor in stimulating economic growth, economists have expressed doubts about the Federal Government’s transparency in this regard.
The Head of Incentives Administration at the NIPC, Lovina Kayode, however recently supported the waivers, pointing out that the incentives are deliberately put in place to increase foreign investment in the nation.
She added that not all companies were 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.
In addition, she said that not all businesses received tax cuts because the commission follows strict guidelines for granting waivers. According to her,the incentive is also in line with the government’s objective of promoting a favorable business climate and drawing in 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 noted.
Meanwhile, 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 breaks companies currently enjoyed as it contradicted the committee’s intention to attract investments.
