October 8, 2019
The Nigerian Investment Promotion Commission (NIPC) recently released its Pioneer Status Incentive (PSI) Report (“the report”) for the second quarter of 2019. The report provides details of PSI applications received and granted and rejected within the quarter.
The PSI Scheme grants three to five years tax holiday to qualifying industries and products to ameliorate the cost of doing business in Nigeria. The release of the PSI quarterly report is part of the responsibilities of the NIPC in the administration of the PSI Scheme. The report for the first and second quarters of 2019 are as summarized below:
|New PSI Applications Received||27||24|
|Approvals in Principle Granted||6||10|
|Extension Applications Approved||4||2|
|Pending PSI Applications||219||181|
|Abandoned PSI Applications||54||104|
From the above, it is obvious that the report for the second quarter presents a notable difference from that of the first quarter of the year.
The report highlights the extent to which businesses are striving to utilize the PSI in recent times. Given the economic incentive that the PSI Scheme presents to companies doing business in Nigeria, the decline in the grant of the incentive and the increase in the number of abandoned applications leaves more to be desired. While it is commendable that the number of pending applications has reduced, the number of current beneficiaries of the PSI Scheme appears to be quite low as opposed to the number of companies that should qualify for the Incentive.
It is imperative for companies to take advantage of the benefits that the PSI Scheme offers. In doing so, there is a need for a company to confirm its eligibility to apply for a PSI and ascertain if obtaining PSI provides overall benefit to it before commencing such application.
It is equally important for a company to analyze the effect and likely impact of an extension of an existing PSI before applying for extension. In this regard, companies are advised to seek appropriate professional support to navigate the demands of a PSI application successfully.