Companies seeking new tax incentives face multi-agency approval process

Companies seeking to benefit from Nigeria’s new tax incentive regime will have to navigate a multi-layer approval process involving several government agencies and ultimately secure presidential approval before accessing the incentives designed to boost investment and industrial growth.

Officials and tax experts who spoke at a webinar organised by Forvis Mazars said the new framework is designed to tie incentives directly to investment performance while strengthening oversight and accountability in the administration of tax reliefs.
“The applications are subject to a multi-level approval process; then they get passed further to the presidency for final approval,” Oluwatobi Olafaji, tax manager at Forvis Mazars, said during the webinar.

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The process forms part of the Economic Development Tax Incentive (EDTI), introduced under the Nigeria Tax Act 2025 to replace the Pioneer Status Incentive (PSI), which policymakers say failed to generate sufficient economic benefits despite years of implementation.
Under the new arrangement, companies seeking incentives must first apply through the Nigerian Investment Promotion Commission (NIPC), which serves as the primary administrator of the scheme. Applications are then subjected to further review by the Industrial Inspectorate Department (IID) and the Nigerian Revenue Service (NRS) before final approvals are granted.

“The primary administrator of EDTI is NIPC, so NIPC serves as the central authority responsible for the coordination and administration of this incentive,” Olafaji said.
The incentive comes at a time when Nigeria is seeking to attract more private capital to support economic expansion. The country attracted about $14 billion in foreign investment inflows in the first nine months of 2025, with foreign direct investment recording a 700 percent quarter-on-quarter increase in the third quarter, highlighting renewed investor interest in Africa’s largest economy.

Government officials say the new tax incentive framework is intended to deepen that momentum by directing incentives towards sectors capable of delivering industrialisation, job creation, innovation, and economic diversification.

According to Olafaji, the previous incentive regime was characterised by fragmented administration and overlapping regulations that often reduced effectiveness.
“We discovered that there was quite a lot of fragmentation around administrative bureaucracies in terms of various tax laws and legislation to align with, but with the recent tax reform, we now have harmonisation of the various provisions under a unified document, which is the Nigeria Tax Act 2025,” he said.

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Unlike the former pioneer status scheme, which granted qualifying firms tax holidays, the EDTI adopts a performance-based model that links benefits directly to investment levels.
“Until you invest a certain amount of qualifying capital expenditure in that sector, you will not be eligible to get this incentive,” Olafaji said.

Eligible companies will receive annual tax credits equivalent to five percent of qualifying capital expenditure for an initial period of five years. The incentive may be extended for another five years if beneficiaries reinvest 100 percent of profits generated during the initial incentive period into expanding the same business activity.
The administration of the scheme will also involve extensive monitoring and verification. The Industrial Inspectorate Department is responsible for certifying production dates, verifying capital investments, and monitoring compliance, while the Nigerian Revenue Service oversees the certification and utilisation of tax credits.

Officials said companies benefiting from the scheme will be required to maintain separate accounting records for qualifying and non-qualifying activities and comply with periodic reporting obligations.

While some investors may raise concerns about the number of agencies involved in the approval chain, government officials insist safeguards have been introduced to prevent delays.
“The issue of delay belongs to the past, and going forward, there is nothing to fear whether your application will be processed on time or not,” said Eyitope Osinowo, Director, Federal Ministry of Industry, Trade and Investment (FMITI), during the webinar.

Osinowo noted that the law prescribes timelines for processing applications, with production-date certificates expected to be issued within one month after the verification requirements have been met.
Stakeholders say the success of the new framework will ultimately depend not on the number of certificates issued but on its ability to attract productive investment and stimulate broader economic development.
“The success will not be judged by the number of certificates issued or processed,” Olafaji said. “We are basically looking at the contribution of those who succeeded in getting the incentive certificate, their contribution to investment and ultimately economic development.”