The Nigerian Investment Promotion Council (NIPC) has granted fresh tax holidays to 12 companies in the first quarter of this year, raising the total number of beneficiaries to 104. This initiative is part of the Federal Government’s efforts to stimulate economic growth and attract investments through the pioneer status incentive (PSI).
Companies Granted Tax Holidays
The 12 companies granted 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)
- A. A Rano Nigeria Limited (Natural gas supplier)
- Basma Agric Processing Limited
- Flex Films Africa PVT Limited
- Addmie Nutrition Limited
- Dufil Prima Foods Plc
NIPC’s Role and Revenue
The NIPC is responsible for granting tax holidays to eligible companies, contributing significantly to its internally generated revenue. Between 2020 and 2023, the NIPC generated an average of N1 billion annually from fees associated with these incentives.
Economic Impact and Criticism
Tax incentives have been crucial in driving economic growth, but they have also sparked debate due to the substantial revenue lost through annual waivers. Economic experts emphasize the need for transparency and objective criteria in granting these incentives. The pioneer status incentive exempts companies from paying income tax for a period, which can be either full or partial, under the Industrial Development Income Tax Act. This measure is intended to stimulate investment by targeting products or companies that do not already exist in the country.
Investments and Approvals
The companies receiving these tax holidays have collectively invested N125.74 billion in their operations and production. The NIPC also provisionally approved nine additional companies for the incentive, pending the fulfillment of certain conditions. In the first quarter of this year, the NIPC received 18 new PSI applications and approved extensions for two of the eight companies that applied for them.
Revenue and Future Reforms
A breakdown of NIPC’s revenue shows it earned N3.1 billion in 2020, which dropped to N1.92 billion in 2021, before rising again to N2.1 billion in 2022 and N2.11 billion in 2023. The Chairman of the Presidential Tax Reform Committee, Mr. Taiwo Oyedele, highlighted the government’s commitment to reviewing tax waivers through new reforms. He assured that existing tax holidays would not be reversed, in line with the committee’s objective to attract and respect 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,” said Mr. Oyedele.
He further emphasized that reversing granted exemptions would contradict the committee’s principles, ensuring that current beneficiaries can complete their tax holidays, but no new exemptions will be granted once the new laws are enacted.
This initiative by the NIPC reflects a strategic move to boost economic activities and attract significant investments, thereby fostering industrial development and growth in Nigeria.
