Flutterwave and nine other companies will not benefit from a tax incentive scheme by the Nigerian government, according to a report last week.
The Federal government of Nigeria can grant companies pioneer status incentive (PSI) to exempt them from paying income tax for a period of time. This is done to attract and encourage the creation of more businesses in the country.
What’s PSI?
The Pioneer Status Incentive was established by the Industrial Development Income Tax Act No 22 of 1971. It is a tax holiday which permits certain industries and products to not pay corporate income tax for up to five years (three years initially and renewable for an additional one or two years).
Industries that qualify for these incentives are Information and Communication; Trade; Construction; Agriculture; Mining and Quarry; Electricity and Gas supply; Waste Management; Manufacturing; Administrative service and Financial services where Flutterwave belongs.
Besides belonging to any of these categories, applicants must have physical long-term assets worth over ₦100 million ($243,837) and must be able to show the positive impact its business will have on the Nigerian economy.
So why rejection?
According to the Nigerian Investment Promotion Commission (NIPC) report, these companies were denied for various reasons.
Five companies were rejected because of the across-board incompatibility of their projects with the PSI scheme. Flutterwave and three others were denied because they submitted their applications after the window allowed for submission closed.
According to the report, 33 firms are currently benefiting from the tax incentive scheme, while the requests of 132 companies are still pending.
Yewande Sadiku, the Executive Secretary for NIPC said that the government is working to boost the country’s rating in the area of ease of doing business and that the commission has entered into multiple partnerships with the private sector to harness potential investments in the country.
If you enjoyed reading this article, please share in your WhatsApp groups and Telegram channels.
