The Federal Government through the Nigerian Investment Promotion Commission has granted fresh tax holidays to 12 companies in the first quarter of this year under the Pioneer Status Incentive initiative, increasing the number of total beneficiaries to 104 companies.
The commission disclosed this in its Q1 2024 PSI report released and obtained by our correspondent on Monday.
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 are Basma Agric Processing Limited; Flex Films Africa PVT Limited; Addmie Nutrition Limited; and Dufil Prima Foods Plc.https://live.primis-amp.tech/content/video/amp/videoIframe.php?s=113240#amp=1
The report also stated that the companies had invested N125.74bn in its operations and production.
In addition, NIPC said it also granted approval in principle to nine other companies, who will join the beneficiary companies after fulfilling certain conditions.
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.
“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 offered by the Federal Government, which exempts companies from paying income tax for a certain period. This tax exemption can be full or partial.
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.
The products or companies eligible for this pioneer status do not already exist in the country.
Meanwhile, a total of 213 fresh applications for the tax holiday are still pending as of Q1 2024, according to the NIPC report.
In April, The PUNCH reported that about 107 companies including Dangote and Mikano International are currently enjoying tax exemption from the Federal Government and the new figure implies that the commission has removed some 15 companies from the list.
Tax incentives have been a contentious issue due to the high amount of revenue lost to waivers granted every year. The Federal Government recently disclosed plans to review and reduce tax waivers given to companies operating in Nigeria. It said companies operating in Nigeria received tax incentives worth N6tn annually.
Economic experts stressed the role of tax waivers in driving 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, noting 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 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.
“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.
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 contradicted 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.”
