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The Federal Government of Nigeria has by Official Gazette No. 84, Vol.104 of 2017 (“the Gazette”) published a comprehensive list of pioneer industries and products (“the pioneer list”) referenced S.I. No. 24 of 14 August 2017, and effective from 7 August 2017.

The pioneer list comprises 99 pioneer industries (which include the extant pioneer industries and 27 new industries approved by the Federal Executive Council in August 2017) in the following major sectors of the economy:
 
1.    Agriculture
2.    Mining and Quarrying
3.    Manufacturing
4.    Electricity and Gas Supply
5.    Waste Management
6.    Construction
7.    Trade
8.    Information and Communications
9.    Professional Services
10.  Financial Services
11.  Administrative Services
 
Pioneer status is a fiscal incentive provided under the Industrial Development (Income Tax Relief) Act, Cap I7, Laws of the Federation of Nigeria, 2004, and administered by the Nigerian Investment Promotion Commission (NIPC). The incentive entitles eligible companies to income tax holiday for up to five (5) years – three (3) years in the first instance, renewable for an additional maximum period of two (2) years. In addition to income tax holiday, pioneer companies enjoy other benefits, such as exemption of dividends paid out of pioneer profits from withholding tax.

The review and expansion of the pioneer list by the Federal Executive Council (FEC) is a welcome development that aligns with its objective of economic diversification through acceleration of the growth of the non-oil sector of the economy. The expansion of the list is expected to stimulate the interest of investors in the new pioneer industries and attract the much-needed private capital to the economy. It is also expected that the NIPC will continue to streamline its processes to ensure timely approval of application by eligible investors for the incentive.

We encourage investors to review the pioneer list, evaluate their eligibility for the incentive and seek professional guidance as necessary.

Please click here to download a copy of the Gazette and our publication the 27 pioneer industries approved by the FEC in 2017.

For further enquiries on the above and how we can assist, please contact:

For further enquiries on the above, please contact:

Niyi Ogunkunle

niyi@imekoassociates.com

PAYE is an acronym for “Pay as You Earn”. It is a method of collecting personal income tax from employees’ salaries and wages through deduction at source by an employer as provided by the relevant sections of the Personal Income Tax Act (PITA). (S.81 of Personal Income Tax Act Cap P8 LFN 2011)

Personal Income Tax is a tax that is imposed on individuals who are either in employment or are running their own small businesses under a business name or partnership. Though collection of PIT is a federal responsibility this tax is generally collected by state governments from those that are resident in their various states, regardless of whether they are federal, state, local government, or private sector workers.

The Federal Inland Revenue Service, however, also collects this tax but only from residents of the Federal Capital Territory as well as what may be described as highly mobile federal workers – staff of the Ministry of Foreign Affairs and other Nigerians and foreigners outside the country but earning income in Nigeria (non-residents), expatriate workers resident in Nigeria, Police Officers, and Military Officers. Civilians working in Police and Military formations, however, pay to their respective States of residence.

The current law guiding the taxation of personal incomes is the Personal Income Tax Act (Cap P8 LFN 2004). Under the law, Federal and States’ tax boards are empowered to identify persons living in or earning income from Nigeria who are required to pay tax, and to assess incomes and tax their incomes using specified guidelines and rules.This law also guides the tax official in identifying the residence of potential taxpayers, as well as the sources and origins of their incomes for the purpose of taxing the income.

Forms of PIT

Two forms of taxes are administered under Act, namely

  1. Pay-As-You-Earn (PAYE) i.e. taxes from employment.
  2. Taxes from self employed persons.

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