The Federal Government of Nigeria has approved the application of the 33 out of 155 companies seeking pioneer status under the Industrial Development Income Tax Act in 2021 in order to stimulate investment in the economy.
This was disclosed in the quarterly PSI reports released by the Nigerian Investment Promotion Commission (NIPC) which revealed that investments made by the 33 companies during the year amounted to N543.88billion, while, the government denied about 10 investing firms including the popular Fintech company, Flutterwave.
This pioneer status refers to the incentive offered by the Federal Government to exempt companies from paying income tax for a certain period, which could be full or partial. However, companies eligible for this incentive are the manufacturing or industrial companies that do not already exist in the country.
The report revealed that the firms the government granted the incentive to had invested a total of N45.5bn in the Nigerian economy. Whereas, the other ten companies denied with Flutterwave as a frontier showed that the company’s valuation as at February 2022 rose to $3bn, approximately N1.71trn using an exchange rate of N570/$1, after it was able to raise $250m from a Series D funding round.
Although, in the second quarter of 2021, the government approved tax holidays to eight firms who invested an aggregate of N12.8bn, and another 31 companies were also exempted from tax payment, while the requests of 160 companies were pending.
Likewise, in the third quarter of 2021, eight firms who had invested N328.5bn were granted the pioneer status, while two requests were rejected.
However, for the last quarter of 2021, the PSI report revealed that six companies who had contributed total N157.08bn investments were granted tax reliefs for a three-year period. Overall, at the end of 2021, 46 companies benefitted from the tax incentive scheme while requests of 186 companies were still pending.
In an interview session between the Acting Executive Secretary, NIPC, Emeka Offor and a news agency, Mr. Emeka assured stakeholders of the strengthened partnership that will exist this year with the local and global stakeholders in order to boost Foreign Direct Investments into the country. He mentioned that the country was already receiving green lights from potential investors within the country and across the globe.
He therefore concluded by mentioning that, “we plan to hold more stakeholder engagements in 2022.”
Keynotes
The Industrial Development Income Tax Act 2021 is an act to repeal and re-enact, with major changes, the Industrial Development (Income Tax Relief) Act and to make provision for tax relief industries that may be issued with pioneer certificates by the Minister and other matters ancillary thereto.
The application for the tax relief is accompanied with a non-refundable fee, whether the application is approved or not.
