FIRS To Clampdown On Some Companies With Pioneer Status Tax Waiver

Some companies might lose their tax waiver as pioneer status as the Federal Inland Revenue Service (FIRS) complained that the tax exemption is being abused. FIRS said some companies don't deserve the tax incentive and they are abusing the opportunity.

The criticism of companies comes at a period the tax administration is trying to unlock revenue sources which has been hit by the COVID-19 pandemic. Nigeria's economic growth slowed in Q2 2020 due to the slight impact of the pandemic, and the economy has been projected to slide into recession.

[READ ALSO: 16 States Get NGN100m Each From World Bank, Lagos State Missing From List]

While speaking of the observation of FIRS, Coordinating Director of FIRS tax operations, Femi Oluwaniyi, said some companies that have obtained the pioneer status tax Waiver are not qualified for the status, as most of them are not really pioneers in their market.

Some Companies Will Be Sanctioned Despite Tax Waiver

In Nigeria, companies with pioneer status are given tax holiday for three years. They also get a possible extension of one or two years. This is to support the company's growth in an unfamiliar market that the company is just unraveling. The pioneer certificate is issued by the Nigerian Investment Promotion Commission.

The tax waiver for pioneer status is part of the Industrial Development (Income Tax Relief) Act, but going forward, Oluwaniyi told State Commissioners of Finance that visited FIRS office that the tax agency will be clamping down on companies it views as undeserving of the pioneer certificate or obtained it without due process.

[READ ALSO: AfDB Ban Four Nigerian Companies Over Fraudulent Activities Involving Financial Projects]

Oluwaniyi said pioneer status obtained “outside the law would not enjoy tax relief regardless of the certificate issued to them”, threatening that companies will be made to face sanctions if they don't regularise their such certificates.

Meanwhile, FIRS Executive Chairman, Muhammad Nami, said the capital shared at the last meeting of the federation accounts allocation committee, tax revenue accounted for 70%. Also, the state commissioners of finance are planning to work collaborate with FIRS to increase their state tax revenue.