Over the years Nigerian government has taken many different steps and adapted many incentives to encourage both local and foreign investors to invest in Nigerian business. Pioneer status is one the most wide-spread and major investment incentives in Nigeria. Nigeria offers this privilege to increase the production of certain sectors and reduce its dependency on importing products into Nigeria.

Pioneer Status:

Pioneer status is an incentive from Nigerian government which exempts companies from basically income tax. It is also known as Tax holiday. It is generally regarded as industrial investment device.

This means the company with pioneer status do not have to pay tax for a certain period of time allowing the company to get established. This tax exemption can be full or partial. The products or companies suitable for this pioneer status are:

• Industries or products that do not already exist in the country


• The existing industry do not meet the required needs or fulfill expected goals


• Any industry or product for which there is a favorable prospect of development.

Benefits:

The pioneer status allows companies, industries or products to skip tax for a period of time. Therefore, there are many benefits for this status -

1. Companies can use the exempted tax money to invest back into their business


2. Industries can use this money for the growth of the business


3. This can also help to increase productivity


4. It allows industries to establish their business in Nigeria


5. This will help to grow a new line of production in the country


6. Reduce the countries dependencies on imports

The target of pioneer status is to promote industries that will help Nigeria to meet their economic requirements or has a favorable ground for prospect and further development.

Getting a Pioneer Status:

Qualifications:

The following are qualified to apply for pioneer status:

• Any company incorporated in Nigeria.


•  Promoters of a company which is to be incorporated in Nigeria.

Requirements:

The estimated cost of qualifying capital expenditure to be incurred by the company on or before production day (if the application is approved) has to be an amount which

• In the case of an indigenous controlled company, is not less than N50,000.00 or


• In the case of any other company is not less than N150,000.00


• The applicant company must also state whether the company or proposed company when established is going to be indigenous controlled company.


• The particulars of the assets on which qualifying capital expenditure will be incurred by the company including their source and estimated cost:


• on or before production day


• during a period of 3years following production day.


• The place in which the assets are to be situated.


• Estimate and state the probable date of production date of the company or proposed company.


• Specify any product and by-product (not being a pioneer product) proposed to be produced by the company or proposed company and then give a reasonable estimate of the quantities and value of such product and by-product during a period of one year from production day.


• Give the particulars of the loan and share capital or the proposed loan of the company, including the amount and date of earn issue or proposed issue, and the sources from which the capital is to be or has been raised.


• In the case of a company already incorporated give the name, address and nationality of each Director of the company and the number of shares held by him.


• In the case of a proposed company give the name, address and nationality of foreign promoter.


• A declaration signed by the applicant that all the particulars contained in the application are true and an undertaking to produce proof if required, to the satisfaction of the minister, of the truth of any such particular which the Minister may require the applicant to furnish.


• A non-refundable fee of a hundred Naira which will be credited to the consolidated Revenue Fund of the Federal Government of Nigeria is expected to accompany the application.

Pioneer status has a initial period of three (3) years. It can be extended for two (2) more years maximum. Any industry or company that has pioneer status is prevented from running any other business other than their pioneer industry.

The policy relating to pioneer industry is based on the desire of the Government to encourage the development of new or relevant industries that will reduce the country’s dependent on imports. The pioneer industries and products are identified by a list published in an official gazette.