Tax breaks in Nigeria is becoming a source for concern as data obtained from the Federal Inland Revenue Service annual reports that almost 71 companies gained from N390.26 billion in pioneer status incentives over two years.
By the Industrial Development Income Tax Relief Act, No 22 of 1971, to increase investment in industries, the federal government gives tax breaks to companies with pioneer status awarded by the Nigerian Investment Promotion Commission.
This tax break which excludes eligible industries and products that don’t already exist in the country from payment of corporate income tax is basically for two years and can be extended for one or two more years.
According to information obtained from the FIRS, this particular incentive cost the government an amount of N1.43bn in 2021 and N388.83bn in 2022.
The Q2 2022 report by the NIPC showed that close to 71 companies benefited from this tax incentive.
However, at the end of 2021, the number of beneficiaries was 46 while the applications of 186 companies were yet to be approved.
What this translates to is that there was an addition of 25 beneficiaries in the space of six months.
Tax Breaks in Nigeria: Beneficiaries of the Tax Inventive
Companies that benefit from this incentive are from sectors such as manufacturing, solid material, information and communication, trad, waste management, electricity and gas supply, and tourism, among others.
Companies such as Dangote Sinotrucks West Africa Limited, Lafarge Africa Plc, Honeywell Flour Mills Nigeria Plc, Jigawa Rice Limited, Stallion Motors Limited, Royal Pacific Group Limited, Kunoch Hotels Limited, Princess Medi Clinics Nigeria Limited, Medlog Logistics Limited, and Masters Liquefied Gas Limited.
Also, Aarti Rolling Mills Limited, Von Automobile Nigeria Limited, Ikorodu Steel Mills Limited, Cormart Nigeria Limited, Tiamin Rice Limited, Crown Flour Mills Limited, Elvis Hotels Nigeria Limited, and Olam Hatcheries Limited, among others.
It was recently revealed by the Chairman of the Presidential Tax Reform Committee, Mr Taiwo Oyedele, that the committee would execute a broad tax break review by the plan the former administration had put in place.
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