The Nigerian Investment Promotion Council has received N9.2 billion in revenue from costs associated with issuing Pioneer Status Incentives to qualified companies and from renewal fees during a four-year period.
An analysis of the commission’s domestically generated revenue from 2020 to 2023 shows that it earned an average of N1 billion per year, according to The Punch.
The commission is responsible for awarding tax breaks to qualifying enterprises.
This follows the intentions to review and cut tax breaks currently worth N6 trillion yearly granted to businesses operating in Nigeria.
The substantial amount of revenue lost to annual waivers has made tax incentives a controversial issue.
Although tax waivers are a key factor in stimulating economic growth, economists have expressed doubts about the Federal Government’s impartiality and transparency in this regard.
The federal government offers an incentive called pioneer status that spares businesses from paying income tax for a predetermined amount of time. Either a complete or partial tax exemption is possible.
Offered under the Industrial Development Income Tax Act with tax reliefs for three years, the incentive is generally regarded as an industrial measure aimed at stimulating investments in the economy.
In the first quarter of this year, the commission gave new tax breaks to 12 enterprises, bringing the total number of beneficiaries to 104 companies, according to the commission’s 2024 first-quarter report.
According to the NIPC report, the 12 companies newly given 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); and A.A Rano Nigeria Limited (Natural gas supplier).
Others include Basma Agric Processing Limited; Flex Films Africa PVT Limited; Addmie Nutrition Limited; and Dufil Prima Foods Plc.
The companies had invested N125.74 billion in their operations and manufacturing, according to the report.
The report further stated that nine other companies have also been approved in principle by NIPC, and they will join the beneficiary companies upon meeting specific requirements.
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 vacation, but only two of those requests were approved.
