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ISSUANCE OF NEW GUIDELINES FOR PIONEER STATUS INCENTIVE

Aug 11 2017
News & Events >> Firm News

ISSUANCE OF NEW GUIDELINES FOR PIONEER STATUS INCENTIVE

The Federal Executive Council on 3^rd August 2017, lifted the suspension placed on the processing of pioneer status applications, recommended the addition of 27 industries to the existing pioneer status list, and the removal two industries – mineral oil prospecting and the manufacture of cement - from the list.

 

Some of the new industries to be added to the Pioneer List include:

Ø   Manufacture of leather footwear, luggage and handbags; paints, varnishes and printing ink; batteries and accumulators; steam generators; railway locomotives, wagons and rolling stock;

Ø   Waste treatment, disposal and material recovery;

Ø   E-commerce services, and software development and publishing; and

Ø   Production, publishing, distribution and photography of motion pictures, video and television programme and music.

 

However, these additions and removals shall not take effect until it is published in a gazette as required by The Industrial Development (Income Tax Relief) Act (IDITRA).

 

Furthermore, on 7th August 2017, the Federal Ministry of Industry, Trade and Investment issued new Application Guidelines for Pioneer Status Incentive (the Guidelines). The Guidelines highlight the considerations for the issuance of Pioneer Status Incentive (PSI) to applicant companies as well as the modes of applying for a new PSI or extension certificate. It also outlines the timeframes for processing such applications and the obligations of beneficiary companies.

 

PSI exempts qualifying industries from the payment of income tax for an initial period which may be renewed for a maximum additional term of two years.

 

The IDITRA is the legal framework for the PSI. The Act empowers the President to designate certain industries as pioneer industries to encourage their further development or establishment in Nigeria. A pioneer industry is any industry not being carried on in Nigeria on a scale suitable to the country's economic requirements or at all, or in which there are favourable prospects of further development.

 

Highlights of the Guidelines

Various government bodies have been assigned specific roles for the effective implementation and administration of the Guidelines.

·    The Federal Executive Council is responsible for the periodic review of the Pioneer List;

·    The Federal Ministry of Industry, Trade and Investment (FMITI) is charged with specifying the mode of application for PSI;

·    The Nigerian Investment Promotion Commission (NIPC) is responsible for processing PSI applications and ensuring compliance with the provisions of the Guidelines and IDITRA. Furthermore, the NIPC has the powers to approve and extend PSI applications as well as cancelling pioneer certificates where these provisions are contravened;

·    The Industrial Inspectorate Department of FMITI shall certify the date of production and the effective date of the PSI; and

·    The Federal Inland Revenue Service (FIRS) shall ensure full implementation of the PSI and issue certificates of qualifying capital expenditure to applicants of PSI extensions.

  

Opportunities presented by the new Guidelines

The new Guidelines provides for tax breaks in pioneer industries and its effective implementation could be an incentive to boost foreign investment in the major economic sectors and give more comfort to local investors in Nigeria.