Pioneer status is a fiscal incentive provided under the Industrial Development (Income Tax Relief) Act, Cap I7, Laws of the Federation of Nigeria, 2004 (IDA). Under the incentive, companies operating in designated pioneer industries or producing pioneer products, which apply for and are granted pioneer status, are entitled to income tax holiday for up to three (3) – five (5) years in the first instance, renewable for an additional maximum period of two (2) years. In addition to income tax holiday, pioneer companies enjoy other benefits such as the exemption of dividends paid out of pioneer profits from withholding tax.

The review of the pioneer status incentive (PSI); an incentive administered by Nigerian Investment Promotion Council (NIPC), led to the suspension of the PSI scheme since September 2015. However, on 7 August 2017, the Minister for Industry, Trade and Investment, Mr. Okechukwu Enelamah, lifted the suspension on the PSI scheme and also announced the approval of addition of 27 new industries and products to the list of pioneer industries. Similarly, the new PSI guidelines and process chart (“the guidelines”) which the NIPC had earlier released on its website was approved.

This article explains the details of the new guidelines and how companies can take advantage of this incentive.

• Approval of additional 27 industries

The approved list of 27 industries focuses on emerging industries in Nigeria such as e-commerce companies, software development, video and television production, real estate investment vehicles and manufacturing of machinery, among others. The Minister also stated that mineral oil prospecting and cement are no longer part of the list of pioneer industries.

Click here to download a copy of the new 27 industries. The full list can be accessed on NIPC’s website

• Required documents for PSI applications

The guidelines require PSI applicants to submit a copy of the following documents in addition to that required under the former guidelines:

– Applicant’s pension compliance certificate
– Nigerian Social Trust Insurance Fund (NSITF) registration certificate
– Industrial Training Fund (ITF) compliance certificate
– Regulatory license(s) to operate in the sector or business activity (where applicable)
– Approval letter received for any incentives/waivers/concessions/grants from other government agencies (where applicable)
– Applicant’s sustainability policy

• Applicable fees

We have outlined in the table below the change in the applicable fees under the old and new guidelines.

Under the old guidelines, the 2% projected tax savings was paid before the issuance of the pioneer certificate and was not refundable regardless of whether the company makes a profit or loss during the pioneer period. However, under the new guidelines, applicants pay 1% of the actual pioneer profits at the end of a year in which the company makes a profit. Therefore, applicants are better off under the new regime in this instance.

On the other hand, under the new regime, applicants will now pay an additional ₦3million to enjoy PSI in their initial application.

• Timeline for PSI application process

The process flowchart introduced by the Minister proposes definite timeline for application and processing of PSI. Based on the process flowchart, the time required to apply and obtain an approval in principle is 18 weeks while to apply for a production day certificate (which comes after an approval in principle) and obtain the PSI certificate is 7 weeks.

In total, an applicant should expect to receive the PSI certificate in 25 weeks (about 6 months) from the date of application. In addition, the time required to obtain a PSI extension certificate is 15 weeks.

• Annual Performance Report and Impact Assessment

According to the guidelines, beneficiaries of PSI are now required to submit a performance report annually to NIPC not later than 30 June of the following calendar year. The report is expected to contain the company’s financial statements, evidence of payment of the annual service charge and other information as provided in the guidelines.

Failure to submit the annual performance report for any year, after two reminders, will result in the PSI certificate being cancelled, removal of the company’s name from the list of beneficiaries and notification to FIRS to collect the tax for the period the report was not filed and the remaining pioneer period initially granted.

A periodic impact assessment would also be carried out by NIPC during the period that a company enjoys the PSI incentive. The purpose of the impact assessment is to measure the effectiveness of the incentive and to evaluate the utilization of the saving accruing from the incentives.


Going forward, the Federal Executive Council has agreed that the pioneer list would be reviewed every two years in order to ensure that the Federal Government (FG) is responsive to changing economic environment. Based on FG’s commitment to the promotion of transparency and efficiency in the PSI process, we hope that the new PSI application and approval process would follow the provisions of the Guidelines to prevent abuse of the incentive.