Dangote, Mikano International, 105 Others Granted Tax Holiday Worth N2.5 Trillion in Investments

Despite the Federal Government’s efforts to curtail tax incentives, 107 companies, including industry giants like Dangote and Mikano International, are currently benefiting from tax exemptions worth N2.5 trillion in investments, according to findings by The Punch.

The number of beneficiaries enjoying Pioneer Status under the Industrial Development Income Tax Act has surged from 83 in the first quarter of 2023 to 107 firms by the fourth quarter of the same year, as revealed in the latest Pioneer Status Incentive (PSI) reports released by the Nigerian Investment Promotion Commission.

While 79 firms submitted new requests, 211 applications are still pending. Additionally, 56 companies had their applications approved, and 19 firms were granted incentive extensions until 2026.

The Pioneer Status Incentive, which exempts companies from paying income tax for a specified period, aims to stimulate investments in the economy, particularly in sectors where such investments are lacking. The tax exemption can be full or partial and lasts for a three-year period.

Although specific amounts granted to companies were not disclosed, data from the Federal Inland Revenue Service annual reports revealed that approximately 71 companies enjoyed N390.26 billion in pioneer status incentives between 2021 and 2022.

The 107 companies operate across various sectors, including manufacturing, pharmaceuticals, information and communication, trade, construction, waste management, electricity and gas supply, tourism, and infrastructure. Some notable beneficiaries include Dangote Fertilizers, Mikano International Limited, Sinotrucks West Africa Limited, and JMG Nigeria Limited.

However, the government rejected applications from five firms, including Checkers Africa Limited and Sygen Pharmaceutical Limited, during the review period.

Tax incentives have been a subject of debate due to the significant revenue lost annually to waivers granted to companies. While the government plans to review and reduce tax waivers, officials maintain that these incentives are vital for attracting foreign investments.

The Chairman of the Presidential Tax Reform Committee, Mr. Taiwo Oyedele, reiterated the committee’s commitment to conducting a comprehensive tax waiver review.

Despite concerns about transparency and objectivity in granting tax waivers, economic experts emphasize the importance of incentives in driving economic growth. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, stressed the necessity of transparent processes to ensure that tax incentives align with broader economic goals.

The Nigerian Investment Promotion Commission plans to publish impact reports to assess the effectiveness of these incentives in promoting job creation and economic activities.