In a surprising move that has stirred controversy, the Nigerian Investment Promotion Commission (NIPC) announced the approval of tax holidays for 34 companies seeking tax incentives and waivers under the Industrial Development Income Tax Act for the year 2023. This revelation was made by Lovina Kayode, the Head of Incentives Administration, during an end-of-the-year press briefing organized by the commission in Abuja.
Tax incentives, a contentious issue due to the substantial revenue lost to annual waivers, have been defended by Kayode as essential for attracting foreign investments into the country. The Federal Government, in September, revealed that companies operating in Nigeria benefit from tax incentives amounting to a staggering N6 trillion annually.
Chairman of the Presidential Tax Reform Committee, Mr. Taiwo Oyedele, disclosed plans for a comprehensive review to reduce tax waivers, acknowledging the annual figure to be around N5 trillion. Notable companies such as Dangote Sinotrucks West Africa Limited, Lafarge Africa Plc, Honeywell Flour Mills Nigeria Plc, Jigawa Rice Limited, and Stallion Motors Limited have previously enjoyed tax waivers through pioneer status incentives.
Contrary to the perception that Nigeria grants too many waivers, Kayode emphasized the stringent procedures followed by the commission in awarding tax breaks. According to her, the pioneer status incentive allows companies a three-year period without paying corporate income tax, aiming to attract more investments.
Speaking at the press briefing, Kayode said, "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 undeserving companies." She defended the incentives, stating that the tax expenditure is minimal compared to the overall economic gains.
The NIPC Executive Secretary, Aisha Rimi, echoed the commitment to facilitating and assisting investors in the New Year. She emphasized the need to support and promote the commission's activities to compete with other countries vying for investors.
In a bid for transparency, Kayode announced the commission's plan to publish impact reports on the effectiveness of pioneer status incentives. The report aims to assess job creation and other economic activities resulting from the incentives granted, providing insight into the overall impact on the country's economy.
As Nigeria navigates the delicate balance between attracting foreign investments and ensuring fiscal responsibility, the decision to grant tax holidays to these companies continues to spark debate and scrutiny. The NIPC's commitment to transparency and impact assessment will play a crucial role in shaping the narrative around these controversial tax incentives.
