NIPC Seeks to Review Pioneer Status to Qualify Emerging Companies for Tax Relief

James Emejo and Folalumi Alaran in Abuja

The federal government yesterday said it would undertake a review of the Pioneer Status Incentive (PSI) programme, under the Industrial Development (Income Tax Relief) Act, in order to include emerging activities that require government support.

The acting Executive Secretary, Nigerian Investment Promotion Commission (NIPC), Mr. Emeka Offor, also said the government would expunge companies deemed to have attained maturity from the list of beneficiaries going forward.

Speaking at the first quarter 2022 media briefing, he said the commission was committed to ensuring that Nigeria attracts the quantum of investment required to stimulate sustainable socio-economic development.

Essentially, the PSI represents a tax incentive to companies in industries labeled as pioneers, and are temporarily exempted from paying company income tax in their formative years to enable make considerable profit for re-investment into the business.

Administered by the NIPC, it is a tax holiday granted for five years (initial period of three years and renewable for additional two years) to qualifying industries that meet the criteria, from paying corporate income tax.

Companies qualified for pioneer status also enjoy the benefits of exemption from 10 per cent withholding tax on dividends paid out of business profits.

Also, the NIPC boss disclosed that investments valued at about $23.3 billion were tracked by the commission last year. This represented about 39 per cent increase over the $16.74 billion recorded in 2020.

The investment announcements, though not actual investments, nevertheless helps in gauging confidence level and appetite in the business environment. In the past, some of the investments tracked did materialise.

Offor added that increase in value of investment interests in the country further demonstrated the growing adaptation to the global ‘new normal’ after the economic disruption occasioned by the restrictions imposed to check the spread of the COVID-19 pandemic.

He said the improvement was showed the growing confidence of investors in the government’s efforts to improve the national investment landscape.

According to him, Lagos, Bayelsa, Delta, Akwa Ibom and Adamawa ranked as the five leading investment destinations with $8.7 billion, $3.6 billion, $2.9 billion, $2 billion, and $1 billion respectively in 2021.

The manufacturing sector had 20 projects valued at $10.5 billion or 45 per cent of total investment prospects.

Other were construction 16 per cent, electricity, gas, steam and air conditioning supply 13 per cent, information and communication 12 per cent, and mining and quarrying 9 per cent.

Offor however, called on all Nigerian, at home or in the diaspora to develop a conscious sense of patriotism by being cautious of what they about the country and emphasise on its positive achievements over the negative narratives.

He said to woo as many domestic and foreign investors this year, the commission would continue to build on past successes while charting new paths for sustainable development of the capacity of staff of the State Investment Promotion Agencies and stimulate healthy competition for investments across the country.

He added that the commission would further leverage on relationships with the chief executives of states to ensure sustained appreciation of the issues of the business environment with the understanding that the aggregation of the sub-national perception forms the national image.

He said the NIPC had evolved a strategy to profile opportunities in each state of the federation as well as sustain the engagements with the sub-national governments.