Question: What is the Pioneer Status Incentive and how can a company apply for it?
Answer: The Pioneer Status Incentive (PSI) is a tax holiday that grants qualifying industries and products relief from the payment of corporate income tax for an initial period of three years. It may be extended for one or two additional years.
An industry or product is designated as pioneer if:
- It is not being carried on in Nigeria on a scale suitable to the economic requirements of Nigeria or at all, or there are favourable prospects of further development in Nigeria.
- It is expedient in the public interest to encourage the development or establishment of such industry in Nigeria.
A company interested in applying for PSI status is required to make a project presentation to the Nigerian Investment Promotion Commission (NIPC). The application should cover the items listed below:
- Company Overview
- Organisational, Board, Management and Shareholding structure
- Project Overview
- Sector Overview
- Sector Opportunity
- Description of Project
- Description of Production or Service Delivery Process
- Key Competitors
- SWOT Analysis
- Objectives for seeking PSI
- Project Impact
- Economic Diversity and Growth
- Industrial and Sectoral Development
- Skills and Technology Transfer
- Export Development
- Import Substitution
- Environmental, social and governance policies and plans
- Project Cost
21 Financing Sources
- Five-year Projected Profit and Loss, Cash Flow and Balance Sheet
- Five-year Projected Tax Savings and Utilisation
Following evaluation and internal due diligence on a company’s application, two to three NIPC staff shall visit the company’s project to verify the information provided in its application.
A company operating under PSI status is required to submit a performance report annually to NIPC. The report shall be submitted no later than June 30 of the following calendar year, and shall provide actual audited financial information and the following:
- a) Formal covering letter to the Executive Secretary of NIPC
- b) Company and project information (if different)
- c) Production and financial performance
- d) Number of employees and emolument
- e) Training cost
- f) Skills and technology transfer
- g) Raw materials and components
- h) Export earnings and destinations
- i) Infrastructure developed
- j) Environmental, social and governance projects
- k) Utilisation of tax savings
- l) Declaration signed by Chief Executive Officer/Managing Director
- m) Evidence of payment of fees
Failure to submit the annual performance report for any year, shall result in the PSI certificate being cancelled; removal of the company’s name from the list of beneficiaries; and notification to Federal Inland Revenue Service (FIRS) for collection of tax for the unexpired period as well as the period for which the report was not submitted.
For further information on the Pioneer Status Incentive, visit the Nigerian Investment Promotion Commission website (www.nipc.gov.ng) or email inquiries to email@example.com.