Nigeria: Updates On Pioneer Status Income Tax Incentive Scheme In Nigeria

Summary

The Nigerian Investment Promotion Council (NIPC) recently released its Pioneer Status Incentive (PSI) Report for the fourth quarter of 2018. The Report indicates that 8 fresh PSI applications were granted within the quarter. The NIPC quarterly reports also reveal that within the year 2018, a total of 36 fresh PSI applications were granted while 10 applications for PSI extensions were also granted.

Details

The PSI Scheme is an incentive Scheme that grants three to five years tax holiday to qualifying industries and products to ameliorate the cost of doing business in Nigeria.

In 2015, the Federal Government placed an administrative suspension on the processing and issuance of PSI. However, the Federal Government lifted this suspension in August 2017 and 27 new industries and products were included in the Scheme (Read our newsletter on the lifting of the administrative suspension here.

The NIPC quarterly reports indicate that between August 2017 and December 2018, the NIPC granted fresh PSIs to 36 companies and approved the extension of PSI for 10 companies already enjoying the incentive. Amongst these companies, the manufacturing sector received most of the PSI approvals followed by other sectors such as power, telecommunication, real estate amongst others. The reports also indicate that the NIPC approved some PSI applications made prior to the suspension of the Scheme in 2015. This suggests that the NIPC revisited those applications that were initially filed before the process was suspended.

Implication

Since the Federal Government lifted the suspension on the PSI Scheme in 2017, there has been an increased participation of both indigenous and foreign investors in the Scheme. A number of qualifying companies, including companies that had applied prior to the suspension have received the PSI.

Therefore, companies that wish to take advantage of the PSI Scheme should engage the relevant professionals to assist in determining the benefits of taking advantage of the Scheme and applying for the incentive.

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