BEVERLY HILLS, January 07, (THEWILL) – Based on the recently enacted Finance Act, small and medium enterprises (SMEs) and other agricultural production businesses in Nigeria may be granted pioneer status incentive for almost six years.
Pioneer status incentive is a tax holiday granted to qualified industries and products resulting in exemption from payment of corporate income tax for a specified period.
Mr Taiwo Oyedele, West Africa Tax Leader and a member of PwC Global Board for Leadership Development, made the disclosure in a tweet shared by the tax expert who played a major role as a member of the Inter-Ministerial Committee that drafted the 2020 Finance Bill.
According to Mr Oyedele, small businesses and companies engaged in primary agricultural production in the pioneer industry such as crop, livestock, forestry and fisheries may be granted pioneer status incentive for an initial period of four years and an additional two years – making a total of 6 years.
The pioneer status incentive is one of the available tax incentives in Nigeria aimed at attracting investment into critical sectors of the nation’s economy.
It was included in the key reforms of the new Finance Act 2020 to incentivize qualifying entities.
Giving further insights into the Finance Act, Oyedele said the amendments made in the new law seek to redress challenges in implementing the pioneer status incentive.
Now, qualifying entities would be granted an income tax holiday of up to six years (four years initially and renewable for an additional two years) to entities that meet the criteria.
In addition, pioneer companies may enjoy other benefits including an exemption from withholding tax on dividends paid out of business profits.
The pioneer status incentive is an impressive move as it will help to benefit corporate entities to cut down on overhead cost through tax exemption for the total period incentive.
It will also double down on all companies operating in the crop, livestock, forestry and fisheries production space, as a pioneer industry to reduce the cost of doing business, in a bid to stimulate the development of the primary agricultural production subsector of the Nigerian agricultural sector.
This reform as captured in the 2020 Finance Act demonstrates the Federal Government’s commitment to supporting business owners and other stakeholders in the agricultural sector with a view to fostering increased participation.
The Finance Act 2020 which took effect from 1st January 2021, introduces over 80 amendments to 14 different laws.
The Finance Act 2020 also seeks to support the implementation of the 2021 budget by proposing key reforms to specific tax and other revenue areas.
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