The federal government has published the report on the application for Pioneer Status Incentives (PSI) for the first quarter (Q1) of the year 2021 via the Nigerian Investment Promotion Commission (NIPC).
This is in line with the requirements of the Law on Industrial Development (Income Tax Relief) Chap. 17, the Federal Laws 2004 and the Ordinance on Pioneer Status (Delegation of Certain Legal Functions) of 2017.
In the report, NIPC denied applications from 10 companies seeking pioneer status under the Industrial Development Income Tax Act in the first quarter of 2021.
Some of the companies whose applications have been rejected are Flour Mill of Nigeria Plc, Flutterwave Technology Solutions Limited, Fountain Manufacturing Company, Al-Hamsad Rice Mill Limited, Engie Fenix Nigeria Limited, Royal Foam Product Nigeria Limited, Echostone Development Nigeria Limited, Benchmark Construction Limited, Super Packaging Limited, and Envoy Hotel Limited.
A further analysis of the Pioneer Status Incentive Report received from NIPC for the first quarter found that 17 companies’ applications were approved in principle, 6 companies were granted PSI for a period of 3 years, 33 companies were currently benefiting from the tax incentive program and 8 applications were accepted extended.
In addition, requests from 132 companies were still pending, while 24 new requests were received in addition to 5 renewals received.
The 6 companies that received tax exemptions during the period are Pan African Towers Ltd, African Foundries Ltd, Aarti Rolling Mills Limited, Princess Medi-Clinics Nigeria Ltd, Medlog Logistics Ltd and Tiamin Rice Ltd of Nigerian Economy.
The NIPC report found that these companies were denied tax exemptions for a variety of reasons, 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.
Royal Foam Products Nigeria Limited, a mattress manufacturer, and Flour Mills of Nigeria Plc, a grain products manufacturer, have been denied tax exemptions because their expansion projects are not covered by the Industrial Development (Income Tax Relief) Act.
The report goes on to show that the federal government has denied the applications of Al-Hamsad Rice Mill Limited, ENGIE Fenix Nigeria Limited, Envoy Hotel Limited and Flutterwave Technology Solutions Limited because they submitted their applications after the deadline for submission had.
What you should know
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 generally seen as an industrial measure aimed at stimulating investment in the economy, adding that the products or companies that qualify for this pioneering status are products or industries that do not yet exist in the country .
The NIPC found there were tremendous investment opportunities in the agriculture, transportation, solid minerals and manufacturing sectors, and the government was working to upgrade the country’s business-friendliness rating.