FEC approves tax breaks for 27 new industries
The Federal Executive Council (FEC) on Wednesday approved 27 new industries and products to enter into the pioneer status to give tax holidays to them for three years, to enable them to grow and expand investments.
The list was last reviewed in 2006 and the approval was to bring the industrial policy of the country to global best practices.
The Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah, gave the hint while addressing State House Correspondents on the decisions of FEC.
"The FEC gave approval to a memorandum that was presented to amend the list of pioneer industries and products that will enjoy pioneer status going forward.
"The pioneer incentive scheme is governed by the Industrial Development Income Tax Relief Act.
"The whole purpose of it is to give tax holidays to industries that we consider pioneer, not mature, to enable them to grow and attract investment in them," he said.
He said that the list covered a wide range of industries and the tax relief covered three to five years.
Enelamah said that the pioneer status review attention was paid to the administration’s economic recovery and growth plan and to capture the current realities that would enable the realisation of the growth plan.
He added that there was multi stakeholder engagement involving the public and private sectors in identifying the industries suitable for the pioneer incentive scheme.
"We have tried to remove all ambiguities in the definition of industries by reclassifying industries according to the international standard industrial classification, which is the same standard used by the Nigerian Bureau of Statistics.
"We also agreed that the pioneer list should be reviewed every two years and that in the case of additions to the list, it will be affected immediately.
"In case of deletion from the list, there will be a three-year window that will be allowed for those investing in that industry and enjoying pioneer status to carry on till the end of that three-year period.
"Against this backdrop, we then approved 27 industries that were recommended for addition to the pioneer list," he added.
The minister stated that the list would be made public, adding that the mineral oil prospecting, already governed by the petroleum profit tax, was not part of the pioneer industries, same for the cement where the country already had become net exporters.
He said that rather than lose revenue, the status was an incentive to enable new industries to enter the market, enter new industries and invest more for those already in, adding that it did not remove tax payments for existing industries.
"This is fairly a well-used policy and carrot by countries and Nigeria had it before but we had to review it because it had not been reviewed since 2006.
"The whole idea is that it is an incentive to attract people to invest more in sectors," he said, adding that most of the agro and agro-processing, industrialization, creative industries, power, science and technology and players should be allowed to have tax incentive.
"It will increase our tax revenue instead of the reverse," he added.