Eight firms from power, oil and gas, ICT, and aviation sectors have filed fresh applications to the Nigerian Investment Promotion Commission (NIPC) for tax holiday.
The commission disclosed this in its Q2 Pioneer Incentive Status report just released.
A pioneer status incentive grants companies making investments in qualifying industries and products a tax holiday of three years from the payment of company income tax.
The three-year tax holiday has the possibility of an extension for one or two additional years to enable the industry concerned to make a reasonable level of profit within its formative years.
According to the NIPC report, the companies that applied for the incentive in the second quarter of this year include Daybreak Power Solution Limited, Rain Oil Limited, Kam Steel Integrated Company Limited, Carverton Helicopter Limited, Don Mac Limited, Uraga Power Solution Limited, Okra Technologies Limited, and Abumet Nigeria Limited.
The commission, however, disclosed that none of the new applicants had been granted approval as they are yet to make presentations to the investment agency.
Aside from the new applicants, the commission said three companies had also filed for an extension of their tax holiday within the second quarter. In total, 114 applications for tax holidays are said to be pending as of June end.
NIPC in the report stated that the number of companies benefitting from the tax incentive was now 35.
The commission said the 35 companies currently benefiting from tax exemption had invested over N1 trillion in the economy while the total figure of their employed staff stood at 7,755.
Some of the companies with massive investments include ATC Nigeria Limited, a telecom infrastructure company, which is said to have invested N260.3 billion and employed 197 people; Jabi Mall Development Company Limited with N123.7 billion investment and 170 employed staff. This was followed by Cross River-based Lafarge Africa Plc, which invested N120.8 billion with 71 staff.
Others are Unicane Industries Limited with N31 billion investment and 32 employees; Wacot Rice Limited with N18.4 billion investment and 154 employees; Owerri Mall Development Company Limited, which has invested N16.2 billion and provided employment for 206 people; and Asaba Mall Development Company Limited with N13.4 billion investment and 200 employees, among others.
In 2015, the Federal Government had placed an administrative suspension on the processing and issuance of PSI.
The government, however, lifted the suspension in August 2017 and 27 new industries and products were included in the Scheme.
Since the lifting of the suspension, there has been increased participation of both indigenous and foreign investors in the scheme.
Meanwhile, aside from the Federal Government incentive, which is aimed at encouraging more investments, all the 36 states of the federation are rolling out various tax incentives under a new initiative aimed at stimulating economic recovery and cushioning the impact of the coronavirus (COVID-19 pandemic on businesses.
This, however, comes with a reward of $2.5 million for each state under the Federal Ministry of Finance Budget and National Planning (FMFBNP) World Bank $750 million States Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for results.
The World Bank at a recent webinar had noted that such waivers for businesses are no longer optional, but have become an essential element of governments’ stimulus-targeted packages to facilitate recovery for businesses who face a liquidity crisis, and individuals whose livelihoods have been adversely impacted by the COVID-19 crisis.
Already, the move has seen some of the states introducing tax relief programmes to mitigate the unending toll of COVID-19 on businesses and individual taxpayers.
Incentivised by a new Disbursement Linked Indicator (DLI), eligible states will be rewarded with $2.5 million each in performance-based grants if they announce by July 31, 2020 and implement by September 30, 2020 a tax compliance relief programme for individual taxpayers and businesses to mitigate the COVID-19 impact.
The relief programmes, which were initiated in states across the board, have focused on five main tax activities, including an extension of filing and payment dates, tax moratoriums, waivers or reduction of penalties and interests over the extension period.
While some states are also offering rebates or discounts on taxes paid within a specific period, others are allowing the payment of taxes, fees and levies among others in instalments. In the same vein, states’ tax offices are now enabling filing and the issuance of tax clearance certificates electronically.