According to the most recent Pioneer Status Incentive (PSI) reports from the Nigerian Investment Promotion Commission, 107 companies, including renowned names such as Dangote and Mikano International, continue to receive tax breaks, despite the Federal Government's efforts to reduce tax exemptions and increase revenue. The reports indicate that the number of beneficiaries eligible for Pioneer Status under the Industrial Development Income Tax Act has increased by 24, from 83 in the first quarter of 2023 to 107 companies in the fourth quarter of the same year. The Pioneer Status Incentive programme offers companies with a complete or partial exemption from income tax for a set length of time.
This programme offers companies with a complete or partial exemption from income tax for a set length of time.
While the government has stated that it intends to review and reduce tax breaks granted to companies operating in Nigeria, data from the Federal Inland Revenue Service (FIRS) annual reports show that approximately 71 companies enjoyed N390.26 billion in pioneer status incentives between 2021 and 2022.
The tax incentives are intended to encourage economic investment and the formation of pioneer businesses. However, they have been a source of concern because the government suffers considerable revenue loss each year.
The companies that have benefitted include Dangote Fertilizers, Mikano International Limited, Sinotrucks West Africa Limited, West African Cubes Limited, Jigawa Rice Limited, JMG Nigeria Limited, Rain Oil Limited, Okpella Cement Plc, Greenville Liquified Natural Gas Company Limited, amongst others.
Mr. Taiwo Oyedele, Chairman of the Presidential Tax Reform Committee, emphasised the importance of a full review of tax exemptions in line with previous government policies. He emphasized the committee's commitment to providing incentives in a way that is fair and transparent.
Despite criticism of tax incentives, commission officials defended the programme, claiming that it aimed to encourage foreign investment into the country.
Lovina Kayode, the Head of Incentives Administration, highlighted the stringent procedures involved in giving incentives, which ensure that only eligible businesses benefit.
Kayode announced plans to publish impact assessments on the pioneer status program's success in boosting investment and job creation. This effort seeks to increase openness and accountability in the provision of tax incentives.
