Pioneer status tax holiday is an initiative by the Nigerian government designed to encourage the growth of specific sectors like agriculture, manufacturing, power, processing, mining, servicing, etc. With pioneer status incentive, businesses in these sectors have a higher chance of being able to plough back revenue that would have been paid as taxes to the tax authority. In addition to the incentives that businesses enjoy, the shareholders in the businesses also enjoy pioneer status incentive as dividends due to them during this period is tax free.

Pioneer status according to Nigerian Investment Promotion Commission (NIPC) is a tax holiday granted to qualified or eligible industries anywhere in the federation{1}. With pioneer status incentive, a five- year tax holiday is given to eligible companies, while eligible companies operating from economically disadvantaged local government areas of the federation are entitled to a seven- year tax holiday{2}.

HOW TO TAKE ADVANTAGE OF THE PIONEER STATUS TAX INCENTIVE

You can apply for pioneer status incentive if you:

  • Are a corporate body that is registered in Nigeria.
  • Have incurred capital expenditure that is not less than ten million naira (?10,000,000){3}
  • Complete Pioneer Status Incentive Application Form “NIPC Form 2” online. Completed Pioneer Status Application Form must be submitted to the Commission with the following documents:
  • Covering Letter addressed to the Executive Secretary of the Commission
  • NIPC Registration Certificate
  • Corporate Affairs Commission Certificate of Incorporation
  • Statement of Share Capital
  • CAC’s Forms CO2 & CO7
  • Tax Clearance Certificate (TCC)
  • Memorandum and Articles of Association
  • Relevant Regulatory License to operate in the sector or business (where required)
  • Business plan of the proposed or actual project
  • Evidence of payment of a non- refundable Processing Fee of Two hundred thousand naira (?200,000)
  • Pay a Service Charge that is to be determined by NIPC at 2% of the company’s estimated tax savings (derived from the company’s five- year financial projections). Where a company records losses in its projections, the Service Charge will be calculated on the higher of:
  • 0.5% of its net assets; or
  • 0.25% of its turnover{3}

For a list of pioneer industries and their products, please visit this link: http://www.nipc.gov.ng/index.php/invest-in-nigeria/investment-incentiv

REFERENCES

1. Nigerian Investment Promotion Commission, Pioneer Status: http://www.nipc.gov.ng/index.p…

2. Detail Commercial Solicitors, Pioneer Status In Nigeria: Recent Developments and Effects on Investments in Nigeria: http://www.detailsolicitors.com/?section=news&cmd=details&newsid=46&printview=1

3. PricewaterhouseCoopers (PWC), Nigeria Tax Alert- February 2014, Pioneer Status Incentive Regulations 2014: http://pwcnigeria.typepad.com/files/tax-alert_pioneer-incentive-regulations.pdf

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