3 YR Tax Holidays: FG Updates Industries, Guidelines For Pioneer Incentive Scheme Applications

by Ike Obudulu Last updated on August 26th, 2017,

ABUJA, NIGERIA, 8th August, 2017. The Nigerian Government has lifted the administrative suspension on processing Pioneer Status Incentives (PSI) applications, following the conclusion of critical reforms to the incentive regime. It also announced a release of new guidelines for PSI applications as well as a revamped list of pioneer industries and products

This was made known today, by the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah. According to the Minister, the Federal Executive Council (FEC) at its last meeting approved the lifting of the suspension, a new guideline and a revamped Pioneer list with the addition of 27 key industries and deletion of two industries and a biennial review of the list going forward. In line with the reform provisions, all additions will be added to the list immediately, and all deletions will be removed from the list in 3 years.

He explained that the review of the list of Pioneer industries and products was done to bring it in line with the economic realities of Nigeria and the Economic Recovery and Growth Plan (ERGP)

Enelamah went on to say that “The Federal Government is committed to encouraging and attracting investments into critical sectors of the economy which will significantly impact development and deliver key benefits to the country.” He added: “These benefits include Economic Growth and Diversification; Industrial and Sectoral Development; Employment; Skills and Technology Transfer; Export Development; and Import Substitution.”

Recall that an administrative suspension was placed on the processing of PSI applications in September 2015, to allow for a comprehensive review and reform of the incentive regime.

This was aimed at increasing transparency and process efficiency, better articulating the expected economic benefits, and improving the Federal Government’s ability to measure the impact of the incentive.

The new application guidelines provide information on the considerations for assessing new PSI and extension applications. It further outlines the application processes and timelines. It also details the ongoing obligations of beneficiaries.

The PSI grants companies making investments in qualifying industries and products a tax holiday from the payment of company income tax for an initial period of three years, with the possibility of an extension for one or two additional years.

An industry or product is designated as pioneer if it is not being carried on in Nigeria on a scale suitable to the economic requirements of the country or not at all; or where there are favourable prospects for further development; or if it is expedient in the public interest to encourage the development and establishment of an industry in Nigeria.

Yewande Sadiku Executive Sec CEO of nipc explains PSI programme In Video

In her remarks, the Executive Secretary of the Nigerian Investment Promotion Council (NIPC) Ms. Yewande Sadiku, stated: “The reforms have brought further clarity, predictability and process efficiency to the Pioneer Status Incentives (PSI) regime. We will continue the reform process as we plan to take the PSI application process online. We will also engage with relevant stakeholders with a view to updating the existing legislations.”

Yewande Sadiku Executive Secretary of  CEO of NIPC further explains the PSI  incentive programme In the opening Video. She stressed that the tax holiday is for a minimum of three years and is extendable to five years for qualified applicants.

New Industries Added To The Pioneer list

Mining and processing of coal;
Processing and preservation Of meat/poultry and production Of meat/poultry products;
Manufacture Of starches and starch products;
Processing Of cocoa;
Manufacture of animal feeds;
Tanning and dressing Of Leather;
Manufacture Of leather footwear, luggage and handbags;
Manufacture of household and personal hygiene paper products;
Manufacture Of paints, vanishes and printing ink;
Manufacture of plastic products (builders’ plastic ware) and moulds;
Manufacture Of batteries and accumulators;
Manufacture of steam generators
Manufacture of railway locomotives, wagons and rolling stock;
Manufacture Of metal-forming machinery and machine tools;
Manufacture of machinery for metallurgy;
Manufacture Of machinery for food and beverage processing;
Manufacture Of machinery for textile, apparel and leather production;
Manufacture Of machinery for paper and paperboard production;
Manufacture Of plastics and rubber machinery;
Waste treatment, disposal and material recovery;
E-commerce services;
Software development and publishing;
Motion picture, video and television programme production,
distribution, exhibition and photography;
Music production, publishing and distribution;
Real estate investment vehicles under the Investments and Securities Act;
Mortgage backed securities under the Investments and Securities Act; and
Business process outsourcing.

For further information and to download the new application forms, guidelines for PSI and Pioneer list, please visit the website of Nigeria Investment Promotion Commission (NIPC) — www.nipc.gov.ng says Dr. Okechukwu Enelamah, Minister of Industry, Trade and Investment.

Minimum 3 YR Tax Holidays: Nigeria Adds 27 Industries To Pioneer Incentive Scheme

The Federal Executive Council on Wednesday approved 27 new industries and products to enter into the pioneer status to give tax holidays to them for three years, to enable them grow and expand investments.

The list was last reviewed in 2006 and the approval was to bring the industrial policy of the country to global best practices.

The Minister of Industry, Trade and Investment, Okechukwu Enelamah, gave the hint while addressing State House Correspondents on the decisions of FEC.

“The FEC gave approval to a memorandum that was presented to amend the list of pioneer industries and products that will enjoy pioneer status going forward.

“The pioneer incentive scheme is governed by the Industrial Development Income Tax Relief Act.

“The whole purpose of it is to give tax holidays to industries that we consider pioneer, not mature, to enable them to grow and attract investment in them,’’ he said.

He said that the list covered a wide range of industries and the tax relief covered three to five years.

Mr. Enelamah said that the pioneer status review attention was paid to the administration’s economic recovery and growth plan and to capture the current realities that would enable the realisation of the growth plan.

He added that there was multi-stakeholder engagement involving the public and private sectors in identifying the industries suitable for the pioneer incentive scheme.

“We have tried to remove all ambiguities in the definition of industries by reclassifying industries according to the international standard industrial classification, which is the same standard used by the Nigerian Bureau of Statistics.

We also agreed that the pioneer list should be reviewed every two years and that in the case of additions to the list, it will be affected immediately.

In case of deletion from the list, there will be a three-year window that will be allowed for those investing in that industry and enjoying pioneer status to carry on till the end of that three-year period.

Against this backdrop, we then approved 27 industries that were recommended for addition to the pioneer list.”


Nigeria Federal Executive Council, FEC

The minister stated that the list would be made public, adding that the mineral oil prospecting, already governed by the petroleum profit tax, was not part of the pioneer industries, same for the cement where the country already had become net exporters.

He said that rather than lose revenue, the status was an incentive to enable new industries to enter the market, enter new industries and invest more for those already in, adding that it did not remove tax payments for existing industries.

“This is fairly a well-used policy and carrot by countries and Nigeria had it before but we had to review it because it had not been reviewed since 2006.

“The whole idea is that it is an incentive to attract people to invest more in sectors,’’ he said, adding that most of the agro and agro-processing, industrialization, creative industries, power, science and technology and players should be allowed to have tax incentive.

“It will increase our tax revenue instead of the reverse,” he added.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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