By Adedapo Adesanya
The Nigerian Investment Promotion Commission (NIPC) has said it does not give tax exemptions to “undeserving companies,” noting that from the applications received in 2023, only 34 firms were granted three years of tax holiday as part of efforts to promote the companies’ investment drive towards developing the nation’s economy.
The Head of Incentives Administration at the agency, Mrs Lovina Kayode, noted that, “This tax exemption known as Pioneer Status Incentives (PSI) is executed under the Investors Relations Department of the NIPC and allows a company three years of not paying Corporate Income Tax (CIT).”
According to her, not all companies are granted incentives owing to the stringent procedures followed by the commission on waiver awards.
While acknowledging the high amount of revenue lost to waivers granted every year, Mrs Kayode said what mattered was the bigger picture, adding that the move allowed the amount of foreign exchange brought into the country to ease the prevailing condition.
“The Federal Inland Revenue Service (FIRS) and our parent ministry, the Ministry of Industry, Trade and Investment, are also part of this process to ensure that the right investors get this incentive. So far, 34 applications have been approved, and one of the things we intend to do is to ensure that we are not just giving incentives to undeserving companies,” she explained.
“Meanwhile, there is already a notion that Nigeria gives out too many waivers, incentives, and concessions.
“However, tax expenditure means what the government has lost by granting PSI, was just a small amount compared to the gains made by granting these incentives to qualified companies,” she added.
She revealed the plans by the commission to publish impact assessment 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 [2024]; 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, and what kind of import substitution has come about because we granted these incentives.
“And how much will the government gain after the three years of them [the companies] defaulting paying these taxes?” she quipped.
On his part, the Head of Policy and Advocacy at the commission, Mr Salami Abayomi, expressed displeasure at the rate at which foreign companies/investors were leaving the country.
According to him, some challenges are responsible for this development, but the commission was working in collaboration with relevant agencies to address the issue.
He expressed optimism that by 2024, the efforts of the agencies in that regard would yield positive results.
Modupe Gbadeyanka