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NIPC releases report on Pioneer Status Incentive

In Nigeria, the government generates revenue from the taxation of individuals and businesses. Nevertheless, the Federal Government of Nigeria may exempt a business from corporate income tax for a specific period. This type of tax exemption is known as a Pioneer Status Incentive (PSI). The Nigerian Investment Promotion Commission (NIPC) administers the pioneer status incentive. Some objectives of PSI are to encourage investment, economic welfare, and business growth in Nigeria. Currently, ninety-nine industries can apply for PSI. They include companies in agriculture, mining, and quarrying, manufacturing, energy, waste management, construction, textile, chemical, and pharmaceutical industries.

Granting of PSI is not automatic. A company that meets the requirements may apply for a certificate of pioneer status. If successful, the company will enjoy a tax holiday for an initial period of 3 years. Thereafter, a company may request a renewal for another 2 years. Application is open to new and existing companies. The Industrial Development (Income Tax Relief) Act is the principal act for pioneer status in Nigeria.

In line with its recent reforms, NIPC has issued the Pioneer Status Incentives Report for the first Quarter of 2019 (Q1 2019 Report) which discloses the total number of applications received, granted and declined. NIPC received 27 fresh applications for PSI, 7 companies enjoyed PSI and 4 companies received an extension of a tax holiday. Consequently, the total number of companies under pioneer status in Nigeria is 28. The Q1 2019 Report also indicates that 219 applications are pending, 54 applications abandoned and 4 applications declined. Reports from 2017 to 2018 are also available.

Furthermore, the NIPC has formalized the procedures for applying for a PSI. Under the Ministerial Order, the Executive Secretary of NIPC may perform some responsibilities of the Minister for Industry, Trade, and Investment. With the introduction of transparency and accountability in PSI reporting, investors will be able to make informed decisions on placing capital in a target industry or product line. Overall, the timely issuance of PSI could contribute to the growth and development of businesses in Nigeria.

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