The Pioneer Status Incentive ("PSI") is one of the available tax incentives in Nigeria aimed at attracting investment into critical sectors of the Nigerian economy. It was created under the Nigerian Industrial Development (Income Tax Relief) Act ("IDA") to incentivize qualifying entities. The PSI grants an income tax "holiday" of up to five years (three years initially and renewable for an additional two years) to entities that meet the criteria. In addition, pioneer companies may enjoy other benefits including an exemption from withholding tax on dividends paid out of business profits. Below are highlights:
What are the pioneer industries?
These are the industries which qualify for PSI. Companies that engage in any of the industries below may apply for the PSI. Below is an abbreviated list of applicable subsectors.
|Information and communication||Publishing of books; software development; motion pictures, videos and television production and distribution; music production and distribution; and telecommunication.|
|Financial Services||Real Estate Investment Trust; and mortgage backed securities.|
|Administrative Services||Business process outsourcing; and transportation (land, water, rail and pipeline).|
|Construction||Construction and operation of roads, railways, airports, utility projects, water projects, industrial projects residential and non-residential building.|
|Waste Management||Waste treatment, disposal and material recovery.|
|Electricity and Gas Supply||Electric power generation, transmission and distribution; and manufacture and distribution of gas.|
|Agriculture||Crop production; livestock; fishing; and forestry|
|Mining and Quarrying||Mining and processing of coal; mining and processing of metal ores; and quarrying and mining of other minerals|
|Manufacturing||Manufacture of refined petroleum products; processing and preserving of meat or poultry and its products, fish, shell fish, fruits, nuts, vegetable, cocoa; manufacturing of grain mill products, edible oils, diary products, starch and starch products, sugar, coffee and tea products, animal feed; manufacturing of wearing apparel; manufacturing of paper, personal hygiene products, basic chemicals, fertilizers, pesticides, agrochemicals and nitrogen compounds; manufacturing of rubber and plastic products; manufacturing of electrical equipment and electronics; manufacturing of basic metal and steel and fabricated metal products; Manufacture of motor vehicles and components and other transport equipment etc.|
What are the Qualifications?
The company must be engaged in the pioneer industry; must have physical long-term assets worth over N100 million; and must be able to show the positive impact its business will have on the Nigerian economy.
How to apply?
Application will be by a letter to the Nigerian Investment Promotion Commission (NIPC) in the first year of production, attaching legal and business documents like incorporation documents, regulatory permits, business plan etc.
What are the Obligations on Beneficiaries?
Beneficiaries are expected to submit an annual performance report to the NIPC and must comply with the requirements of IDA and other relevant regulations of the NIPC.
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