Eko Hot Blog reports that about 107 companies including Dangote and Mikano International are currently enjoying tax exemption from the Federal Government despite its insistence to discontinue the programme and drastic steps to improve its revenue base.
It also increased the number of beneficiaries enjoying Pioneer Status under the Industrial Development Income Tax Act by 24 from 83 in the first quarter of 2023 to 107 firms by the fourth quarter of 2023.
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According to The PUNCH, this was disclosed in the latest Pioneer Status Incentive reports released by the Nigerian Investment Promotion Commission and obtained by our correspondent on Sunday.
An analysis of the PSI report showed that while the requests of 79 firms were newly received, 211 firms are 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 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.
Offered under the Industrial Development Income Tax Act with tax reliefs for a three-year period, the incentive is generally regarded as an industrial measure aimed at stimulating investments in the economy.
Tax incentives have been a contentious issue due to the high amount of revenue lost to waivers granted every year. The Federal Government recently disclosed plans to review and reduce tax waivers given to companies operating in Nigeria.
It said companies operating in Nigeria received tax incentives worth N6tn annually.
But officials of the commission had maintained that the incentives were meant to boost foreign investments into the country.
The Chairman of the Presidential Tax Reform Committee, Mr Taiwo Oyedele, recently said the committee would carry out a comprehensive tax waiver review in line with the plan the previous administration had set.
At a press briefing last year, the Head of Incentives Administration, Lovina Kayode, indicated that not all companies were granted tax breaks due to stringent procedures followed by the commission on waivers award.
She said, “The pioneer status incentive is a stimulus that allows a company to get three years of not paying corporate income tax, just to get more investments.
“This process is stringent because our parent ministry and the federal inland revenue service are involved to make sure the right investors get this incentive.
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“So far this year, we granted 34 applications have been approved and one of the things we intend to do is to ensure we are not just giving incentives to undeserving companies. However, there is already a notion that Nigeria gives out too many waivers, incentives, and concessions.
“However, tax expenditure which means what government has lost by granting pioneers status incentive is just a small amount compared to what the country gains by granting these incentives to qualified companies.”
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