The Nigerian Investment Promotion Council has raked in a total sum of N9.2bn as revenue from charges imposed on the issuance of Pioneer Status Incentive to eligible companies and renewal fees in four years, Sunday PUNCH reports.
The commission, charged with the responsibility of granting tax holidays to eligible companies made an average of N1bn annually, according to an analysis of its internally generated revenue between 2020 and 2023.
The fees also represent a major source of revenue for the commission.
This new development came amidst plans to review and reduce tax waivers given to companies operating in Nigeria currently worth N6tn annually.
Tax incentives have been a contentious issue due to the high amount of revenue lost to waivers granted every year.
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.
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 are those that do not already exist in the country.
The commission in its 2024 first quarter report stated that it granted fresh tax holidays to 12 companies in the first quarter of this year, increasing the number of total beneficiaries to 104 companies.
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.
The report also stated that the companies had invested N125.74bn in its operations and production.
In addition, NIPC said it also approved in principle nine other companies, which 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.
Meanwhile, a further breakdown showed that the commission earned N3.1bn in 2020, dropped to N1.92bn in 2021 before increasing to N2.1bn in 2022 and N2.11bn in 2023.
The Chairman of the Presidential Tax Reform Committee, Mr Taiwo Oyedele, has said that the government will not stop the lamentation of waivers granted to companies until the new tax reforms are 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’s intention to attract investments.
“The rules we have drafted concerning 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.”
