By Abiola Olawale
The Federal Government’s efforts to discontinue the tax exemption program might have met limited success as about 107 companies, including Dangote and Mikano International, are still benefiting from it.
The latest Pioneer Status Incentive (PSI) report released by the Nigerian Investment Promotion Commission revealed that the number of beneficiaries enjoying Pioneer Status under the Industrial Development Income Tax Act increased by 24 from 83 in the first quarter of 2023 to 107 firms by the fourth quarter of 2023.
The report also revealed that investments made by the 107 companies during the year amounted to N2.49tn. They operate in sectors that include manufacturing, solid material, pharmaceuticals, information and communication, trade, construction, waste management, electricity and gas supply, tourism, and infrastructure, among others.
The companies that are benefitting from the tax relief 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
More included GZ Transport and Logistics Nigeria Limited, African Foundries Limited, Royal Pacific Group Limited, Kunoch Hotels Limited, Princess Medi Clinics Nigeria Limited, Medlog Logistics Limited, and Masters Liquefied Gas Company Limited.
Others included Aarti Rolling Mills Limited, Von Automobile Nigeria Limited, Ikorodu Steel Mills Limited, Confluence Metals Fabrication Company Limited, Cormart Nigeria Limited, Tiamin Rice Limited, Outsource Global Technologies Limited, Crown Flour Mills Limited, Elvis Hotels Nigeria Limited, Olam Hatcheries Limited, among others.
An analysis of the PSI report showed that while the requests of 79 firms were newly received, 211 firms were pending; 56 companies had their applications approved in principle, while 19 firms were granted incentive extensions for another three years to 2026.
“Approvals-in-principle are subject to the payment of application fees and only take effect after the payment of such fees,” the report stated.
The New Diplomat reports that the tax exemption program was designed to encourage investment in key sectors of the economy, with the aim of promoting economic growth. The pioneer status is an incentive offered by the Federal Government, which exempts companies from paying income tax for a certain period. This tax exemption can be full or partial.
However, critics argue that the program has primarily benefited large companies, leaving smaller businesses at a disadvantage. While the government has taken significant measures to enhance its revenue base, the tax exemption program has remained largely unaffected.
It would be recalled that earlier this year, the Senate described as unfortunate and unacceptable the N17 trillion that the country lost to tax waivers extended to some individuals and corporate establishments in the last five years.
The upper chamber urged the Federal Inland Revenue Service (FIRS) to suspend any form of tax waiver and replace it with the rebating system.
Although the report didn’t contain the amount granted to the companies, Data from the FIRS annual reports indicated that about 71 companies enjoyed N390.26bn pioneer status incentives between 2021 and 2022.
