Title

Incentive granted

Criteria for claim

Pioneer status

Industrial Development (Income Tax
Relief) Act (“IDITRA”), CAP I7, LFN 2004

• 
Tax
holiday for an initial period of three (3) years, subject to further
extension of up to two (2) years.

Should belong to industries engaged in products declared as
“pioneer products” subject to fulfilling certain requirements as provided in
the governing law. Examples of such industries – manufacturing, processing,
mining, servicing, agriculture, etc.

Free trade zone enterprise

Nigeria Export Processing Zones
Act, Cap N107 LFN 2004 (NEPZA)

• 
100% tax
exemption for approved activities carried out within the zone and unhindered
repatriation of funds.

An application for a license is
to be made to the Authority/Zone Management. Approved activities include
manufacturing, trading, service provision, etc.

Incomes exempted from tax

Section 23, Companies Income Tax
Act (CITA) Cap C21, Laws of the Federation of Nigeria, 2004.

• 
Tax
exemption of various classes of income/profits e.g. export income, profits
earned by non-governmental organisations, companies promoting sporting
activities, tax etc.

Third party evidence of income
source.

Rural investment allowance

Section 34, CITA

• 
A portion of expenditure incurred on basic
infrastructural facilities is granted as an allowance against taxable profit
ranging from 5%- 100%.

Incur capital expenditure on provision of essential infrastructure located at
least 20km away from government provided infrastructural facilities. 

Research and development (R&D)

Section 26, CITA

• 
20% investment tax credit on qualifying R&D
expenditure for companies involved in R&D on a commercial scale.

• 
Tax deductibility of R&D expense
(restricted to 10% of total profits) for companies who incur R&D.

Incur R&D
expenditure which can be verified.

Reconstruction investment allowance

Section 32, CITA

• 
10%
of expenditure incurred on plant and equipment

Incur capital expenditure on plant and equipment

Government bonds

Companies income tax (exemption of
bonds) order, 2011

•  Short term securities e.g. treasury bills
and promissory notes issued by Federal, State, Local and Supranational Agencies
and interest earned by holders are exempt from companies income tax

The exemption order is for a period of 10 years to expire
December 2021.

However, only Federal Government bonds remain exempted from CIT
for more than 10 years.

Capital allowance

Schedule II of CITA

• 
Allowance is granted against profits, in
lieu of depreciation. The applicable rates are dependent on class of assets
and range from 25% to 95%          

Assets must be owned by the taxpayer, must be used for the
trade/business and be in use as at the end of the basis period.

Verification and approval by regulators is often required where
the value of the assets exceed ₦500,000.

Minimum tax exemption

Section 33, CITA

• 
Ordinarily, there is minimum amount of tax
payable by companies.  However, there
are exemptions to this rule.

Exemptions are for companies that have at least 25% foreign
equity; or that are engage in agricultural trade/business; or that are within
the first four calendar years of commencement of business

Loss carry forward

Section 31(2), CITA

• 
Tax losses can be carried forward to offset
future taxes. There are however two exceptions to this general rule as
follows;

−  
Losses made by insurance companies cannot
be carried forward beyond a period of 4 years

−  
Losses made by a company during
commencement period cannot be carried forward beyond the fourth year

Have a taxable loss

Small business relief