Business a.m
The Nigerian Investment Promotion Commission (NIPC) has approved tax holidays for 34 companies that applied for incentives and waivers under the Industrial Development Income Tax Act (IDITA) in 2023.
Lovina Kayode, NIPC’s head of incentives administration, made the disclosure at a year-end press briefing held in Abuja.
The revelation of NIPC’s approval of 34 tax holidays comes amid ongoing discussions surrounding tax incentives and the substantial loss of revenue associated with annual waivers.
Kayode stressed that the incentives are strategically implemented to boost foreign investment in the country, and not all companies are granted tax breaks. According to her,the commission has a strict process in place for awarding waivers, ensuring that only companies that meet the criteria are eligible. This is in line with the commission’s mandate to promote investments in the country.
The NIPC has played a key role in overseeing the processes related to tax incentives, ensuring that they contribute to the nation’s economic growth. The commission has thus implemented a system of monitoring and evaluation to assess the impact of incentives and ensure that they are achieving the intended objectives.
The NIPC Head of Incentives Administration, explained that the pioneer status incentive is a stimulus that allows companies to forego corporate income tax for a period of three years in order to encourage more investment. She emphasised that the process of awarding this incentive is stringent, involving the parent ministry and the Federal Inland Revenue Service (FIRS) to ensure that only the right investors are eligible.
Kayode added, “So far this year, we granted 34 applications have been approved and one of the things we intend to do is to ensure we are not just giving incentives to underserving companies. However, there is already a notion that Nigeria gives out too many waivers, incentives, and concessions.
“However, tax expenditure which means what government has lost by granting pioneers status incentive is just a small amount compared to what the country gains by granting these incentives to qualified companies.”
In a further show of transparency, Kayode, disclosed the commission’s plans to publish impact reports evaluating the effectiveness of pioneer status incentives. This is part of the NIPC’s commitment to ensuring accountability and transparency in the area of investment promotion. The impact reports will provide data on the number of jobs created, the amount of taxes paid, and the overall economic impact of the incentives, among other measures.
As part of its efforts to promote investment, the Nigerian Investment Promotion Commission (NIPC) facilitates tax holidays for companies with pioneer status. This incentive is in line with the Industrial Development Income Tax Relief Act, No. 22 of 1971, which aims to encourage investment and stimulate industrial growth in the country.
As part of the tax holiday provision, qualifying industries and products are eligible for relief from corporate income tax for an initial three-year period, which may be extended by one or two additional years upon request. To qualify for the pioneer status, a product or company must not already be present in Nigeria. This incentive encourages the introduction of new industries and the diversification of the economy.
The NIPC’s second-quarter report for 2022 revealed that a total of 71 companies benefited from the pioneer status tax incentive, a significant increase from the 46 companies reported at the end of 2021. This indicates that the use of the incentive has grown over the past year, with a diverse range of sectors taking advantage of the scheme. The report identified manufacturing, solid materials, pharmaceuticals, information and communication, trade, construction, waste management, electricity and gas supply, tourism, and infrastructure as some of the key sectors that benefited from the incentive.
