PremiumTimes EXCLUSIVE: Nigerian govt clarifies 27 businesses to enjoy tax break under pioneer status

The federal government on Monday gave clarifications on businesses that would qualify to enjoy pioneer status under the additional 27 new industries and products approved last week by the Executive Council of the Federation, FEC.

The Executive Secretary, Nigeria Investment Promotion Council, NIPC, Yewande Sadiku, told PREMUM TIMES in an exclusive interview in Abuja that companies that would enjoy pioneer status were only those that ventured to invest in industries that were either non-existent at all, or the country did not have sufficient presence for its economic development.

“Pioneer status does not relate to only new industries or entrants to the economy,” Ms. Sadiku noted. “Under the new arrangement, what the law provides for is different from the ordinary English definition of pioneer, but the legal definition.

While the English definition refers to a business first venture into a new area of operation, the Executive Secretary explained that the legal definition was where the country did not even have an industry at all, or did not have sufficient presence for its economic development.

In trying to encourage the establishment or growth of the industry and the economy, she said government decided to look at its priority sectors in the Nigerian Industrial Revolution Plan, NIRP, and the Economic Recovery and Growth Plan, ERGP, by promoting the 27 industries and products in the approved status document.

Ms. Sadiku said businesses that have existed for several years in a particular sector may not enjoy the pioneer status, except such companies ventured into a brand-new line of business covered under the list of 27 new industries and products.

“For instances, big companies, like JUMIA, who have established themselves in the e-commerce business sector as well as those in the music industry would not enjoy tax exemption by the government under the new regime.

“The pioneer status actually applies to those involved in their first year of business or operations. Clearly those older than that would not benefit,” she explained.

The objective of government, she pointed out, was to attract more people to invest in those sectors that have no investments to contribute to the growth of the economy.

“Only people that have agreed to venture into those sectors that would enjoy the pioneer status, and not those that have been there for more than a year.

“In the music industry, those that have already been there for a while would not enjoy the pioneer status. Government is just trying to encourage new people to invest in those industries. An existing company will only benefit if they are starting a new line of business included in the list of 27,” she said.

The list of 27 industries and products published on Monday by the Federal Ministry of Industry, Trade and Investment in Abuja included mining and processing of coal; processing and preservation of meat/poultry and production of meat/poultry products; manufacture of starches and starch products; processing of cocoa; manufacture of animal feeds; tanning and dressing of leather, manufacture of leather footwear, luggage and handbags; manufacture of household and personal hygiene paper products and manufacture of paints, vanishes and printing ink.

Others included manufacture of plastic products (builders’ plastic ware) and moulds; manufacture of batteries and accumulators; manufacture of steam generators; manufacture of railway locomotives, wagons and rolling stock; manufacture of metal-forming machinery and machine tools, manufacture of machinery for metallurgy, manufacture of machinery for food and beverage processing; manufacture of machinery for textile, apparel and leather production; and manufacture of machinery for paper paperboard production.

Also included were, manufacture of plastics and rubber machinery; waste treatment, disposal and material recovery; e-commerce services; software development and publishing; motion picture, video and television programme production, distribution, exhibition and photography; music production, publishing and distribution; real estate investment vehicles under the Investments and Securities Act; mortgage backed securities under the Investments and Securities Act; and business process outsourcing.

The Minister of Information and Culture, Lai Mohammed, had earlier explained that the benefitting industries would enjoy corporate income tax breaks for a period.

Under the new application guidelines, information on the considerations for assessing new pioneer status and extension applications would be provided online.

Besides, the guidelines further outline the application processes and timelines as well as the obligations of beneficiaries.

The pioneer status grants companies making investments in qualifying industries and products a tax holiday from the payment of company income tax for an initial period of three years, with the possibility of an extension for one or two additional years.