The Nigerian Investment Promotion Commission (NIPC) has announced the approval of tax holidays for 34 companies seeking tax incentives and waivers under the Industrial Development Income Tax Act in 2023. Lovina Kayode, the Head of Incentives Administration at NIPC, revealed this information during an end-of-year press briefing in Abuja.
The tax incentives, which have been a subject of contention due to the substantial revenue lost to annual waivers, are designed to attract foreign investments into the country. The Federal Government had previously stated that companies operating in Nigeria receive tax incentives amounting to N6 trillion annually. To address this, a comprehensive review to reduce tax waivers was announced by the Chairman of the Presidential Tax Reform Committee, Taiwo Oyedele.
Kayode emphasised that the pioneer status incentive allows companies a three-year period without paying corporate income tax, aiming to encourage more investments. The approval of 34 applications for tax breaks in 2023 was confirmed, with companies like Dangote Sinotrucks West Africa Limited, Lafarge Africa Plc, Honeywell Flour Mills Nigeria Plc, Jigawa Rice Limited, and Stallion Motors Limited among the beneficiaries.
The process of granting tax breaks involves stringent procedures, with the involvement of the parent ministry and the Federal Inland Revenue Service, to ensure that deserving companies receive the incentive. Despite the perception that Nigeria grants too many waivers, Kayode argued that the tax expenditure, representing what the government loses through pioneer status incentives, is relatively small compared to the overall benefits gained by promoting investments.
Looking ahead, NIPC plans to publish impact reports on the effectiveness of pioneer status incentives in terms of job creation and other economic activities to promote transparency and accountability. The Executive Secretary of NIPC, Aisha Rimi, reiterated the commission’s commitment to facilitating and assisting investors in the New Year, emphasising the need to support and attract investors amid global competition.