Despite the raging debate over the high amount of revenue lost to waivers granted to corporate entities annually, the Nigerian government approved tax holidays for 34 companies seeking tax incentives and waivers under the Industrial Development Income Tax Act in 2023.
Companies including Dangote Sinotrucks West Africa Limited, Lafarge Africa Plc, Honeywell Flour Mills Nigeria Plc, Jigawa Rice Limited, and Stallion Motors Limited, among others had benefited from tax waivers from pioneer status incentives.
This was disclosed by the Nigerian Investment Promotion Commission (NIPC) Head of Incentives Administration, Lovina Kayode, during an end-of-the-year press briefing organised by the commission in Abuja.
Prime Business Africa recalls that the Federal Government in September, said companies operating in Nigeria receive tax incentives worth N6trn annually. Earlier reports had put the average annual tax waiver figure at about N5trn.
The Chairman of the Presidential Tax Reform Committee, Mr Taiwo Oyedele, who made the disclosure, said a comprehensive review to reduce tax waiver would be implemented.
This is amid the drop in revenue projections by the government worsened by foreign currency shortages and high dependence on debt financing. At the London trading session over a week ago, brent crude prices fell to a five-month low heightening concerns that Nigeria’s economy will be able to meet its revenue targets in 2024.
The sharp decline in oil prices were caused by worries about dwindling demand, less supply, and longer-term interest rates. Figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that the country’s crude oil production, excluding condensates, dropped to 1.25 million barrels per day in November.
But speaking at the press conference, Kayode pointed out that not all companies are granted tax breaks due to stringent procedures followed by the commission on waivers award.
According to her, “The pioneer status incentive is a stimulus that allows a company to get three years of not paying corporate income tax, just to get more investments.
“This process is stringent because our parent ministry and the federal inland revenue service are involved to make sure the right investors get this incentive.
“So far this year, we granted 34 applications have been approved and one of the things we intend to do is to ensure we are not just giving incentives to underserving companies. However, there is already a notion that Nigeria gives out too many waivers, incentives, and concessions.
“However, tax expenditure which means what government has lost by granting pioneers status incentive is just a small amount compared to what the country gains by granting these incentives to qualified companies.”
She further revealed plans by the commission would publish impact reports on the effectiveness of the pioneer status report on job creation and other economic activities to promote investments.
“On impact, that is one thing NIPC is planning on, next year, it is one of our biggest tasks to do an impact assessment. These incentives we gave out, how have they impacted the country in terms of job creation?
“How many jobs are the companies creating and what kind of import substitution has come about because we have granted these incentives and how much would the government gain after the three years of them not paying these taxes,” she added.
The commission’s Executive Secretary, Aisha Rimi, in her virtual address, reiterated commitment to facilitating and assisting investors to gain inroad into the country in the New Year.
He said, “So as I continue to settle down, I will also continue to depend on and rely on your support to promote the activities of the commission.
“The commission, as you all know, was set up really to facilitate, promote, and assist investors into the country and the ones already in the country. Because if nobody traps these people and gives them the support that they need, other countries are competing with Nigeria. So we have to be very intentional.”
