As 37 firms enjoy a 3-yr tax rebate, FG adds 1 yr for SMEs

The Finance Act 2020 has extended the Pioneer Incentive Status (PSI) that qualifies local businesses for tax holidays to four years, and renewable for two years. At least 37 local enterprises have gotten the tax rebate for two and three years maximum, with two-year extension since 2018, records from the Nigerian Investment Promotion Council (NIPC) […]

The Finance Act 2020 has extended the Pioneer Incentive Status (PSI) that qualifies local businesses for tax holidays to four years, and renewable for two years.

At least 37 local enterprises have gotten the tax rebate for two and three years maximum, with two-year extension since 2018, records from the Nigerian Investment Promotion Council (NIPC) have shown.

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There are 102 other firms that have applied for the Pioneer Status Incentive (PSI) to gain tax holidays.

NIPC said PSI approvals are granted in compliance with the requirements of the Industrial Development (Income Tax Relief) Act Cap I7, Laws of the Federation of Nigeria 2004 and the Pioneer Status (Delegation of Certain Statutory Functions) Order of 2017, to promote indigenous businesses.

Eligible business owners are expected to apply for this tax holiday to NIPC and follow through stages to qualify for the PSI.

The processes include submitting the PSI application, the application processing by NIPC, making presentations to NIPC by the enterprise, and the final announcement.

Finance Act extends holiday

Nigeria has expanded the scheme in the 2020 Finance Act recently signed by President Muhammadu Buhari.

According to extracts of the Act, the government is encouraging more firms to join the list of those granted tax holidays especially the Income Tax, to ensure their businesses are lifted.

Commenting on this, a member of PwC Global Board for Leadership Development, Mr Taiwo Oyedele, said the Act targets Small and Medium Enterprises (SMEs) and other small companies in agricultural production such as such as crop, livestock, forestry and fisheries, may be granted pioneer status for almost six years.

Oyedele who was a member of the Inter-Ministerial Committee that drafted the 2020 Finance Act, further explained that the “PSI is one of the available tax incentives in Nigeria aimed at attracting investment into critical sectors of the Nigerian economy,” he said on his Twitter handle.

The amended Act would grant these firms four years and renewable for two years.

PSI holders may also enjoy other benefits like exemption from withholding tax on their dividends.

37 firms got tax holidays since 2018

According to the Pioneer Status Incentive (PSI) Report recently released by NIPC for the third quarter of 2020, there are 37 firms benefiting from tax holidays with PSI. Among the 37 companies enjoying tax holiday as PSI as of September 30, 2020, 10 have already had their status of two and three years tax holiday expired by December 2020.

They are Maryland Mall Lagos, Hyundai Motors Nigeria Lagos, Stallion Motors Lagos, Rensource Distributed Energy Kano, and Sumo Steel Ogun. The rest are CDK Integrated Ogun, Lafarge Africa Cross River, Edimara Properties Lagos, Wacot Rice, Kebbi and Tribute Lifestyle Lagos.

25 others have their PSI tax holiday status of three and two years expiring from April to December 2021. They include Dangote Sinotrucks Lagos, Crown Flour Mills Kwara, Olam Hatcheries Kaduna, Owerri Mall, among others.

Wells-Hosa Farms and Honeywell Flour Mills Nigeria have their PSI expires in March 2022 and December 2023 respectively.

28 firms submit applications, 6 approved

There were 28 new applications received by NIPC between June and September 2020.

Top on the list of the 28 firms that applied afresh for PSI are seven energy firms – North-South Gurara Energy, the owner of the new Gurara hydropower plant in Kaduna; Haske Solar Company, Star Power Utility, ENGIE Fenix Nigeria, Energy Company of the Future, Cummins Power Generation, and WTES Project.

Four agro-allied firms:  Jigawa Rice Mill, Kiara Rice Mill, Ellah Lakes and Coscharis Farms; three hospitality firms comprising Palazzo Versace Hotel & Suite, Koko Beach Hotels & Resort, and The Envoy Hotel.

Two cement firms – Dangote Cement Plc and Okpella Cement (BUA). There are also two mining firms: Dukia Gold & Precious Metals Refining Company, and Eminent Quarry.

Six applications were also granted PSI approval for three years of tax holiday in the third quarter by NIPC.

They are Savannah Sugar in Adamawa from 2010 to 2013; Daily Need Industries (pharmaceuticals) in Lagos, which expired by 2019; Tribute Lifestyle (online store) in Sokoto, ended in 2020. The rest are Kalambaina Cement Company (Sokoto) ending December 2021, Wells Hosa Farms ending 2022, and Honeywells Flour Mills ending 2023.

Three firms applied for an extension of their status. They are Afrifone Ltd, PNG Gas Ltd and Gowus Nigeria Ltd. Aarti Steel Nigeria Ltd in Ogun had applied for an extension earlier, got a two-year extension, which expired in December 2019.

However, three firms that applied for an extension earlier got that approved for three years from August 2020.

102 applications pending, 60 firms abandon process

NIPC said 102 applications are pending at various process stages since 2018. Some of them include Corinthia Villa Hotel & Suites Abuja, JMG, Edo Refinery Benin, Dangote Fertilizer,

CCECC Nigeria, Tiamin Rice, Indorama Eleme Fertilizer, Rain Oil, Kam Steel, Caverton Helicopter, among others.

The data also revealed that 60 other applications have been abandoned by the enterprise owners who had applied.

Some of these firms include Zaria Fertilizer & Rice Mills, Zuma Energy Nigeria, Cedar Crest Hospital Abuja, CIG Motors, Promasidor Nigeria, Ikorodu Steel Mills, Jabi Boat Club, Sokoto Tan, and Gokada rides, among others.