Pioneer Status and the “First Year Rule”: The Myth and The Reality

Table of Contents

Introduction

On Wednesday, August 2, 2017, the Nigerian Federal Executive Council approved the addition of 27 new industries and products to the list of industries considered pioneer. An industry or product is designated as pioneer:

  1. if the industry or product is not being carried on in Nigeria on a scale suitable to the economic requirements of Nigeria; or
  2. if it is expedient in the public interest to encourage the development or establishment of such industry in Nigeria.

On the back of the announcement by the Nigerian government, the Federal Ministry of Industry, Trade and Investment (“FMITI”) released the “Application Guidelines for Pioneer Status Incentive” (the “Guidelines”). The Guidelines, amongst other things, provide for “considerations and mode of application” for Pioneer Status Incentive (“PSI”).

One of the considerations under the Guidelines is that an applicant must make an application for the grant of PSI in the first year of production/service (the “First Year Rule”). This briefing note examines the provisions of the Industrial Development (Income Tax Relief) Act (“IDITRA”) which is the legal framework for PSI with a view to determine the basis for the First Year Rule, both at law and tax policy-wise.

Download full version of the opinion here

 

Want to keep up with our Articles?

Get our most valuable tips right inside your inbox, every month!

Related Posts

Web Banner - business survival vs liquidation 1
COMPANY VOLUNTARY ARRANGEMENT UNDER CAMA 2020: A VIABLE OPTION FOR CORPORATE SUSTAINABILITY?
Under Nigeria's CAMA 2020, Company Voluntary Arrangements (CVAs) offer financially distressed companies...
Web Banner - Conversion Petroleum 22
CONVERSION AND RENEWAL OF PETROLEUM LICENCES AND LEASES IN NIGERIA: WHAT THE 2026 REGULATIONS MEAN FOR UPSTREAM PETROLEUM OPERATORS
The 2026 Conversion and Renewal Regulations introduce a clearer framework for transitioning Nigerian...
Corporate Rescue banner
CORPORATE RESCUE AND INSOLVENCY PROCEDURE IN NIGERIA: A CRITICAL REVIEW OF THE LEGAL REGIME
Nigeria's corporate insolvency framework has decisively shifted from inevitable liquidation to prioritizing...
Web Banner - Gas Flare
GAS FLARE COMMERCIALISATION IN NIGERIA: PROGRESS, GAPS, AND WHAT OPERATORS NEED TO KNOW
Nigeria’s gas flare commercialisation framework has entered its execution phase, with 28 permits issued...
payment ecosystem beyound compliance
BEYOND COMPLIANCE - CBN'S SHIFT FROM REGULATING MARKET PARTICIPANTS TO REGULATING MARKET STRUCTURE
The Central Bank of Nigeria is shifting from individual participant supervision to structural oversight...
NAATIONAL SINGLE WINDOW
NIGERIA'S NATIONAL SINGLE WINDOW: REFORM, RISK, AND THE PROMISE OF A PAPERLESS PORT
Nigeria has officially launched Phase One of the National Single Window (NSW), a centralized digital...
Free Zone Land
COLLATERALISING FREE ZONE LAND INTERESTS FOR DEBT FINANCING IN NIGERIA – REGULATORY FRAMEWORKS AND TITLE REGISTRATION CONSIDERATIONS
Nigeria's Free Zones are capital-intensive environments by design. The Nigeria Export Processing Zones...
Electricity sky
OPERATING IN THE LAGOS ELECTRICITY MARKET: A GUIDE TO LICENSING REQUIREMENTS UNDER THE LAGOS STATE ELECTRICITY LAW, 2024
The Lagos State Electricity Regulatory Commission has officially transitioned to an active market regulation...
BURDEN 1
TOXIC LOANS IN NIGERIA: LAX LENDING PRACTICES IN THE BANKING INDUSTRY AND THE COST OF FAILED DUE DILIGENCE
Toxic loans, also known as Non-Performing Loans (NPLs), are rising in Nigeria due to lax lending practices...