Recent findings have revealed that the Federal Government has granted tax exemptions to about 107 companies, including major players like Dangote and Mikano International, despite its efforts to curtail the program and enhance revenue generation.
According to reports, the number of beneficiaries enjoying Pioneer Status under the Industrial Development Income Tax Act has increased from 83 to 107 firms from the first quarter to the fourth quarter of 2023.
The latest Pioneer Status Incentive (PSI) reports released by the Nigerian Investment Promotion Commission unveil that while 79 firms submitted new requests, 56 companies had their applications approved, and 19 firms received incentive extensions until 2026. This initiative, aimed at stimulating investments, exempts companies from income tax for a specified period, typically three years, under the Industrial Development Income Tax Act.
Although the exact amounts granted to these companies were not disclosed, data from the Federal Inland Revenue Service annual reports revealed that approximately 71 companies enjoyed tax incentives totaling N390.26 billion between 2021 and 2022. These companies collectively invested N2.49 trillion across various sectors, including manufacturing, pharmaceuticals, information technology, and infrastructure.
Notable beneficiaries of the tax holiday include Dangote Fertilizers, Mikano International Limited, Sinotrucks West Africa Limited, and Rain Oil Limited, among others. However, the government rejected applications from five firms during the review period.
While officials maintain that these incentives aim to attract foreign investments, concerns have been raised regarding transparency and objectivity in the selection process. Economic experts emphasize the role of tax waivers in driving economic growth but stress the need for a transparent and equitable approach in granting such incentives.
The Nigerian Investment Promotion Commission plans to publish impact reports to assess the effectiveness of the pioneer status incentive in job creation and economic development, highlighting the importance of these initiatives in promoting investments and fostering economic growth.
