The Federal Executive Council (FEC) of Nigeria has approved a new list of industries and products that could benefit from tax exemption available under the pioneer incentive scheme. Companies and products granted pioneer incentives enjoy three-year tax holiday which may be extended to five years subject to meeting required conditions.
At the meeting of FEC on Wednesday, 2 August 2017, 27 new industries and products were approved for inclusion, bringing the original list of 44 pioneer industries and products to 71. Although the detailed list of approved industries is yet to be made public, it is expected that the industries that are aligned with the key focus of government outlined in the Economic Recovery and Growth Plan (ERGP) are covered.
Other notable announcements with respect to amendment of the list of approved pioneer industries are:
- Mineral oil prospecting which is governed by the Petroleum Profit Tax has been removed from the list of pioneer industries list
- Biennial review of the list of pioneer industries and immediate implementation of new additions or deletions to the list
- Three-year window for products and/or industries impacted by the deletion during which they will continue to enjoy pioneer status incentive.
The approval of new industries and products for pioneer status incentive is a positive development which underscores government’s resolve to actualize the growth plan as articulated in the ERGP. However, the jury is still out on status of pioneer incentive scheme. This is in view of the recent investigation by National Assembly on the perceived abuse of the incentive by companies in Nigeria.
We will keep monitoring this space and provide updates as soon as they become available to us.