The Nigerian government has granted tax exemptions to approximately 107 companies, including prominent entities like Dangote and Mikano International, despite previous indications of discontinuing the program.
These findings were revealed in the latest Pioneer Status Incentive (PSI) reports released by the Nigerian Investment Promotion Commission on Sunday.
The pioneer status incentive allows companies to enjoy exemptions from paying income tax for a specified period, typically three years, under the Industrial Development Income Tax Act.
It aims to stimulate investment in the economy, particularly in sectors where certain products or companies are not already established.
While the exact amount granted to these companies was not disclosed, data from the Federal Inland Revenue Service indicated that approximately 71 companies enjoyed tax incentives amounting to N390.26 billion between 2021 and 2022.
The investments made by the 107 companies during the year totaled N2.49 trillion and span various sectors such as manufacturing, pharmaceuticals, information and communication, trade, and infrastructure, among others.
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Some of the companies benefiting from the tax incentives include Dangote Fertilizers, Mikano International Limited, Sinotrucks West Africa Limited, and JMG Nigeria Limited, among others.
Despite the government’s recent disclosure of plans to review and reduce tax waivers granted to companies, officials argue that these incentives are essential for boosting foreign investments into the country. They maintain that the process for granting incentives is rigorous, involving multiple stakeholders to ensure that only deserving companies benefit.
However, tax incentives have been a subject of debate due to the significant revenue lost to waivers granted annually. While economic experts acknowledge the role of tax waivers in driving economic growth, there are concerns about transparency and the objectivity of the government in granting such incentives.
Moving forward, the Nigerian Investment Promotion Commission plans to conduct impact assessments to evaluate the effectiveness of the pioneer status incentive in job creation and economic activities. This initiative aims to provide transparency and accountability in the granting of tax incentives and ensure that they contribute meaningfully to the country’s economic development.
