The Federal Government has revealed that the 107 companies which it granted tax exemptions collectively invested N2.53tn into the Nigerian economy before securing approvals.
The companies committed to investing a substantial amount across various critical sectors of the economy while also pledging to create employment opportunities for Nigerians—both of which are fundamental prerequisites for qualifying for the three-year tax exemption granted by the government.
These details were disclosed in the latest Pioneer Status Incentive quarterly reports released by the Nigerian Investment Promotion Commission and obtained by our correspondent on Wednesday.
The reports showed that investments made by the 107 companies during the year amounted to N2.53tn.
The firms operate in sectors that include manufacturing, solid material, pharmaceuticals, information and communication, trade, construction, waste management, electricity and gas supply, tourism, and infrastructure, among others.
Our correspondent observed that the majority of the companies secured their tax exemption approvals in 2022, with the incentives set to expire by the end of 2025, while a new batch of firms has recently obtained approvals that will allow them to operate tax-free until 2027.
Further analysis of the quarterly PSI report showed that the requests of 89 firms to be granted tax holidays were newly received, 213 firms are pending, 34 companies had their applications approved in principle, and 14 firms were granted incentive extensions for another three years to 2027. Another 30 are seeking a renewal application for an extension.
The companies that are benefiting include Dangote Fertilisers with an investment of N635.28bn and staff strength of 1,189, Mikano International Limited invested N36.703bn, Jigawa Rice Limited (N2.45bn), JMG Nigeria Limited (N5.67bn), Rain Oil Limited, Okpella Cement Plc, Greenville Liquified Natural Gas Company Limited (N162.50bn), Gidan Bailu Cement Company Limited (N215.533bn), Auxano Solar Nigeria Limited (N4.88bn), AP LPG Limited (N20.63bn), Karma Agric Feeds and Foods Limited (N4.81bn), Agrira West Africa Limited (N42.79bn) and Etsako Cement Company Limited (N200bn).
Additional beneficiaries of the Pioneer Status Incentive include H & W Rice Company Limited (N9.66bn), Segilola Resources Operating Limited N19.76bn), Sifax Marine Limited (N276m) , Ocean & Cargo Terminal Services Limited (N17.708bn), Hulhulde Rice Mill Limited (N3.76bn), O2O Network Limited (N115.56bn), Villextra Technologies Limited (N930m), Flex Films Africa PVT Limited (N37.21bn), Addmie Nutrition Limited (N3.48bn), Century Minning Company Limited (N7.628bn), Eastcastle Infrastructure Nigeria Limited (N34.856bn), Ecovista Industries PVT Limited (N4bn), The Safron Hotel Limited (N2.6bn), Green Recycling Industries Limited (N5.12bn), and Fouani Nigeria Limited (N11.88bn).
Additional companies that have received Pioneer Status Incentive approvals include Al-Wabel Rice Mill Limited with a cumulative investment of (N1.598bn), Royal Salt Industries Limited (N10.75bn), Mustang Industries Limited (N3.77bn), Kam Steel Integrated Company Limited (N31.62bn), Alef Recycling Company Limited (N6.96bn), IRS Pasta Limited (N26.28bn), JMG Limited (N5.67bn), Tiloc Nigeria Limited (N3.13bn), Johnwood Hotel Limited (N2.6bn), Mafa Rice Mills Limited (N5.02bn), and Shafa Energy Limited (N6.15bn).
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 three years, the incentive is generally regarded as an industrial measure aimed at stimulating investments in the economy. The products or companies eligible for this pioneer status are those that do not already exist in the country.
However, the incentives have been a contentious issue due to the high amount of revenue lost to waivers granted every year. The special tax exclusion has reportedly cost the government an estimated N8tn in lost revenue.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has maintained that the pioneer status Incentives are plagued with “a lot of loopholes,” making it impossible for the government to get benefits from the tax credit it “gives away.”
He also pointed out that the pioneer status makes it difficult for the government to quantify revenue forgone and for investors to assess the value of the incentive—undermining transparency on both sides.
