NIGERIA’S federal government granted a total of 48 domestic companies a tax holiday in 2020 as part of a programme to give the economy a much-needed boost according to the Nigerian Investment Promotion Commission (NIPC).
As part of a plan to revitalise the economy, the federal government regularly gives companies in critical sectors of the economy tax holidays also known as the pioneer status incentive (PSI). This is designed to encourage and attract investment into sectors that could significantly impact development and deliver key benefits to the country.
This incentive, provided under the Industrial Development Income Tax Relief Act, grants benefitting firms relief from the payment of corporate income tax for an initial period of three years, extendable for one or two additional years. On the authority of the Minister of Industry, Trade, and Investment, the NIPC processes the PSI applications and on the authority of the president, approves and extends them.
Once approval is granted, the agency issues the pioneer certificates and can also cancel them if the provisions of the law and some set guideline documents are contravened. According to the PSI report of the third quarter of 2020, 34 companies are currently enjoying tax relief under the pioneer incentive.
These companies have about 9,678 staff and have helped in reducing the rate of unemployment in the country. Seven other companies also enjoyed a tax holiday in 2020 but their certificates expired at the end of the year and they can apply for an extension for one or two additional years.