The federal government has rejected the application of 10 companies that applied for pioneer status under the Income Tax Act in the first quarter of 2021.
Pioneer status is a federal incentive that exempts companies from paying income tax for a period of time. This tax exemption can take place in whole or in part.
The incentive is widely seen as an industrial measure aimed at stimulating investment in the economy.
The products or companies that are eligible for this pioneering status are products or industries that do not yet exist in the country.
An analysis of the first quarter Pioneer Status Incentive Report received by the Nigeria Investment Promotion Commission showed that 10 companies’ applications were denied, three companies approved their applications in principle, and six companies granted PSI for a period of three years were.
The report also showed that 33 companies were currently benefiting from the tax incentive scheme, while applications from 132 companies were still pending.
The six companies that received tax exemptions between January and March are Pan African Towers Ltd, African Foundries Ltd, Aarti Rolling Mills Limited, Princess Medi-Clinics Nigeria Litd, Medlog Logistics Ltd, and Tiamin Rice Ltd.
By March 31, these companies had invested N45.5 million in the Nigerian economy.
Fountain Manufacturing Company Limited, Echostone Development Nigeria Limited, Al-Hamsad Rice Mill Limited, Benchmark Constructions Limited, Super Packaging Limited, Royal Foam Products Nigeria Limited, ENGIE Fenix Nigeria Limited, Flour Mills of Nigeria Plc, Envoy Hotel Limited and Flutterwave Technology Solutions Limited are the 10 companies whose applications have been denied.
The businesses the 10 companies operate in are soap making, real estate development, rice milling, woven sack making, mattress making, solar power generation, grain products making, and online payment services.
Further analysis of the NIPC report found that these companies were denied tax exemptions for a variety of reasons, ranging from not allowing business activities for which incentives were sought to late filing applications.
For example, the application from Echostone Development Nigeria Limited, a real estate development company, was denied on March 29 because its contract project was not allowed under the Industrial Development Income Tax Relief Act.
The applications from Fountain Manufacturing Company Limited and Super Packaging Limited were also denied because the activities for which the incentive was requested were not covered by the PSI scheme.
Benchmark Constructions Limited filed its application in August 2019 but was denied tax relief because the documents submitted by its management did not meet the approval requirements.
According to the report, Royal Foam Products Nigeria Limited, a mattress manufacturer, and Flour Mills of Nigeria Plc, a manufacturer of grain products, were denied tax exemptions because their expansion projects were not eligible under IDITRA.
The report goes on to show that the federal government rejected applications from the remaining four companies because they submitted their applications after the deadline for submission.
The companies are Al-Hamsad Rice Mill Limited, ENGIE Fenix Nigeria Limited, Envoy Hotel Limited, and Flutterwave Technology Solutions Limited.
The Executive Secretary of the NIPC, Yewande Sadiku, said that the Commission had entered into several partnerships with the private sector in order to capitalize on potential investments in the country.
She noted that the NIPC is working with key stakeholders to ensure more Nigerians are investing in the country.
They believe there are tremendous investment opportunities in the agriculture, transportation, solid minerals and manufacturing sectors, and the government has worked to improve the country’s business-friendliness rating.
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