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<p>Nine companies in the Information and communications technology&nbsp;(ICT) sector have been beneficiaries of the Pioneer Status Incentive (PSI), a tax exemption initiative of the Federal Government of Nigeria. According to the Q4 PSI report of the Nigeria Investment Promotion Commission (NIPC), the companies collectively invested N159.61 billion to be listed as beneficiaries under the Industrial Development Income Tax Act.</p> 
<p>The report indicates that the number of beneficiaries of the PSI increased to 107 in Q4 of 2023 from 83 in the first quarter (Q1) of the same year. The NIPC also disclosed that 211 companies, including Open Access Data Centre Limited, have pending applications for the PSI status.</p> 
<p>ICT companies with the PSI status include <a href="https://ecinfras.com/" target="_blank" rel="noreferrer noopener">Eastcastle Infrastructure Nigeria</a> Limited, a telecoms company which secured approval for three years with a total investment of N34.86 billion. Another beneficiary is <a href="https://www.ooduainfraco.com/networks/" target="_blank" rel="noreferrer noopener">O`odua Infraco Resources Limited</a>, a network infrastructure company which got approval for three years with a total investment of N96.15 billion.</p> 
<p>Data centre services provider, <a href="https://mdx-i.com/about-us/" target="_blank" rel="noreferrer noopener">Maindata Nigeria Limited (MDX-i)</a> secured a two years extension with a total investment of N13,35 billion (two years) after securing an initial approval of three years.</p> 
<div class="wp-block-image"> 
 <figure class="aligncenter size-full">
  <img loading="lazy" decoding="async" width="800" height="508" src="https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders.jpg" alt="Okra, MDX-i, uLesson, 6 other Nigerian tech companies get tax exemptions over N159bn investment in 2023" class="wp-image-111461" srcset="https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders.jpg 800w, https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders-300x191.jpg 300w, https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders-768x488.jpg 768w, https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders-640x406.jpg 640w, https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders-380x241.jpg 380w, https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders-550x350.jpg 550w, https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders-760x483.jpg 760w, https://technext24.com/wp-content/uploads/2021/04/Okra-Cofounders-600x381.jpg 600w" sizes="(max-width: 800px) 100vw, 800px">
  <figcaption class="wp-element-caption">
   Okra Cofounders: Fara Ashiru Jituboh and David Peterside
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 </figure>
</div> 
<p>Finance API company, <a href="https://okra.ng/" target="_blank" rel="noreferrer noopener">Okra Technologies Limited</a> got a PSI status approval from 2023 to 2025 in Q4, 2023 with an investment of N109.54 million. Also, telecoms service provider, <a href="https://www.amplitude-group.com/" target="_blank" rel="noreferrer noopener">Amplitude Group Limited</a> secured a PSI approval from 2023 to 2026 with an investment of N4.8 billion. Similarly, software company, <a href="https://www.villextra.com/" target="_blank" rel="noreferrer noopener">Villextra Technologies Limited</a> secured the PSI approval from 2023 to 2026 with an N930 million investment.</p> 
<p>Similar: <a href="https://technext24.com/2021/04/21/api-fintech-startup-okra-raises-3-5m-to-boost-talent-base-and-business-growth-in-nigeria/"><strong>API Fintech Startup, Okra Raises $3.5M to Expand Infrastructure and Boost Talent Base</strong></a></p> 
<p>Tech companies already enjoying the PSI status include fibre broadband company, <a href="https://www.dnb.com/business-directory/company-profiles.global_independent_connect_limited.73850dde4bf60f100fb3c1c8a0598143.html" target="_blank" rel="noreferrer noopener">Global Independent Connect Limited</a> which has secured a PSI approval until 2024 with an N8.28 billion investment. Another beneficiary is edutech platform, <a href="https://ulesson.com/" target="_blank" rel="noreferrer noopener">uLesson Education Limited</a> with a PSI approval until 2024 with an N470.31 million.</p> 
<div class="wp-block-image"> 
 <figure class="aligncenter size-full is-resized">
  <img loading="lazy" decoding="async" src="https://technext24.com/wp-content/uploads/2021/01/Sim-Shagaya-CEO-Founder-uLesson.png" alt="Sim-Shagaya-CEO-Founder-uLesson" class="wp-image-101926" width="650" height="546" srcset="https://technext24.com/wp-content/uploads/2021/01/Sim-Shagaya-CEO-Founder-uLesson.png 798w, https://technext24.com/wp-content/uploads/2021/01/Sim-Shagaya-CEO-Founder-uLesson-300x252.png 300w, https://technext24.com/wp-content/uploads/2021/01/Sim-Shagaya-CEO-Founder-uLesson-768x646.png 768w, https://technext24.com/wp-content/uploads/2021/01/Sim-Shagaya-CEO-Founder-uLesson-640x538.png 640w" sizes="(max-width: 650px) 100vw, 650px">
  <figcaption class="wp-element-caption">
   SimShagaya, CEO and Founder of uLesson
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 </figure>
</div> 
<p>The last tech company is payment service provider, <a href="https://merchant.egolepay.com/Identity/Account/Login" target="_blank" rel="noreferrer noopener">Egole Pay Limited</a> with a PSI approval until 2025 with an N650 million investment.</p> 
<figure class="wp-block-pullquote">
 <blockquote>
  <p>According to data from the Federal Inland Revenue Service, about 71 companies enjoyed N390.26 billion in relief from pioneer status incentives between 2021 and 2022.</p>
 </blockquote>
</figure> 
<p>Read also: <a href="https://technext24.com/2021/01/19/sim-shagayas-ulesson-raises-7-5m-series-a-funding-set-to-launch-ios-app/"><strong>Sim Shagaya’s uLesson Raises $7.5M Series A Funding, Set to Launch iOS App</strong></a></p> 
<h5 id="more-about-the-psi-tax-exemption-programme" class="wp-block-heading">More about the PSI tax exemption programme</h5> 
<p>Established by the Industrial Development (Income Tax Relief) Act, No 22 of 1971, the Pioneer Status Incentive is a tax holiday for qualifying companies that relieves them from paying corporate income tax for three years. After the initial 3 years, the holiday is extendable for an additional one or two years.</p> 
<p>This PSI initiative was designed as an industrial measure to stimulate economic investments. Products or companies can only be eligible for this status if they do not already exist in the country.</p> 
<p>Based on the discretion of the. NIPC, the exemption given can be complete or partial. In some instances, the NIPC had gone ahead to issue pioneer certificates for the full 5 years all at once. In many cases, the one-off holiday of 5 years was not solicited by companies and was issued by the NIPC (most likely) for administrative convenience.</p> 
<div class="wp-block-image"> 
 <figure class="aligncenter size-full">
  <img loading="lazy" decoding="async" width="945" height="630" src="https://technext24.com/wp-content/uploads/2020/02/Income-tax.jpg" alt="personal income tax" class="wp-image-53856" srcset="https://technext24.com/wp-content/uploads/2020/02/Income-tax.jpg 945w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-300x200.jpg 300w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-768x512.jpg 768w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-640x427.jpg 640w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-380x253.jpg 380w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-550x367.jpg 550w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-800x533.jpg 800w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-760x507.jpg 760w, https://technext24.com/wp-content/uploads/2020/02/Income-tax-600x400.jpg 600w" sizes="(max-width: 945px) 100vw, 945px">
 </figure>
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<p>Companies granted PSIs enjoy tax relief on income earned during the holiday period and dividends paid from the profits earned during the holiday. The PSI also enables the company to set off tax losses incurred during the holiday against profits earned after the holiday and to deduct capital expenditure in the same manner.</p> 
<p>The government’s drive to make Nigeria an investment destination for different kinds of businesses led to the expansion of the list of eligible pioneer trades from about 37<br>in 1982 to currently over 90 products/industries categories.</p> 
<p>Today, companies in ninety-nine industries are entitled to apply for PSI. These include ICT, agriculture, mining and quarrying, manufacturing industries, electricity and gas supply companies, waste management companies, construction companies, textile industry, chemical and pharmaceutical products manufacturing companies.</p> 
<figure class="wp-block-pullquote">
 <blockquote>
  <p>To qualify for PSI, the product or services of an applicant Nigerian company must be<br>among the list of pioneer industries in Nigeria and such companies must have incurred<br>capital expenditures of up to ten million Naira (N10,000,000).</p>
 </blockquote>
</figure> 
<h5 id="issues-around-tax-exemptions-in-nigeria" class="wp-block-heading">Issues around tax exemptions in Nigeria</h5> 
<p>Tax incentives have become an issue of contention in the country, with experts noting that only a few firms benefit while the government suffers from poor revenues. In 2021, the government <a href="https://nairametrics.com/2021/07/11/fg-rejects-tax-relief-applications-from-flutterwave-flour-mill-8-others/" target="_blank" rel="noreferrer noopener">declined the applications of 10 firms</a>, including Flutterwave. </p> 
<p>In September 2023, the International Monetary Fund advised Nigeria and other Sub-Saharan African countries to eliminate tax exemptions and mobilise domestic revenue to reduce their fiscal deficits.</p> 
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  <img loading="lazy" decoding="async" width="1254" height="868" src="https://technext24.com/wp-content/uploads/2024/04/Taiwo-Oyedele.jpeg" alt="Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms" class="wp-image-229640">
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   Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms
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<p>Subsequently, the Federal Government, through Taiwo Oyedele, chairman of the Presidential Tax Reform Committee, disclosed plans to review and reduce tax waivers given to companies operating in Nigeria.</p> 
<p>He said total tax incentives stood at N6 trillion annually. In 2023, it was estimated that at least 172 companies may not benefit from about N2.4 trillion in tax waivers under the PSI and other tax exemptions if the government phased out some tax waivers.</p> 
<blockquote class="wp-block-quote"> 
 <p>“When you don’t look at your incentive regime, it can get to a point when it becomes a distortion for economic growth because some people benefit and others don’t. We think that what is more pressing and even more important than giving incentives is removing disincentives,” Taiwo Oyedele said.</p> 
</blockquote>

Okra, MDX-i, uLesson, 6 other Nigerian tech companies get tax exemptions over N159bn investment in 2023

Technext.ng

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