The Federal Executive Council (FEC) Wednesday approved the admission of 27 new industries and products into pioneer status with the intention of offering them tax holidays for five years.
Briefing journalists at the end of the weekly FEC meeting, the Minister of Trade and Industry, Dr. Okechkwu Enelamah, who said the list of pioneer industries was last approved in 2006, added that the approval was aimed at bringing Nigeria’s industrial policy in line with global best practices.
According to him, while a different range of industries is accommodated on the list, the tax relief will be in force for three to five years, explaining that the policy was part and parcel of the recently launched Economic Recovery and Growth Plan (ERGP).
Enelamah who also said the list of approved industries would be made public soon, stated that stakeholders in both the public and private sectors were engaged during the selection process.
He said in line with the dynamism of the global community, the policy would be reviewed every two years.
“The Federal Executive Council (FEC) meeting wednesday approved a memorandum that was presented to amend the list of pioneer industries and products that will enjoy pioneer status going forward. “As many of you know the pioneer incentive scheme is governed by the Industrial Development Income Tax Relief Act and the whole purpose is to give tax holidays to industries we consider pioneer.
“Pioneer doesn’t mean that they are new. It only means that they are not yet mature, we want those industries to grow. We want to attract investment in them and you will find that this covers a wide range of industries and those tax holidays range from three to five years. The pioneer list was last reviewed by the FCT in 2006, so you could see that this was long overdue.
“In doing the review, special attention was paid to the ERGP to capture the current realities that will help to implement the plan to make sure we attract the kind of investment, industries and players that will help to implement and realise our objectives in the ERGP.
“I should also point out that there was multi-stakeholder engagement, private and public sector in arriving at the industries that will be included in the pioneer incentive scheme.
“In terms of the recommendations approved by FEC today, we have tried to remove all ambiguities in the definition of industries by reclassifying industries according to the international standard in industrial classification which is the global standard which is also the standard that is used by the Nigeria Bureau of Statistics.
“The other thing we also did is to agree that the pioneer list will be reviewed regularly every two years, biennially so that just that if things come up, we live in a fast changing world and we are being responsive to our world.
“In the case of additions to the list, they will be effected immediately for deletion of industries that we consider mature. There will be a three-year window that will be allowed for those that are already investing in that industry that were 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 today. We also recommended and it was accepted by the council that mineral oil prospecting which is governed by the Petroleum Profit Tax should not be part of the pioneer industries’ list which is really governed by the Companies Income Tax Act.
“It was also accepted that given the success we have achieved in cement which are now net exporters, maybe that is an industry which we could say that we are now where we want to be in terms of maturity even though there is still a lot of scope for the application and the use of cement and you know that will continue. We already have critical mass in cement.
“The scheme will ensure that will not deprive us of revenue. It is an incentive to make people enter your market, enter industries, invest more for people who are already here. It will increase our tax base over time,” he stated. – Thisday.
