Nigerian companies are increasingly reorganising their operations, redirecting investments, and realigning internal resources to benefit from newly introduced tax incentives.
This trend reflects a broader change in corporate planning triggered by the government’s push to strengthen revenue generation while curbing the misuse of tax reliefs.
Under the new Nigeria Tax Act, indefinite tax holidays have been phased out and replaced with the Economic Development Incentive (EDI). Unlike previous regimes, the EDI links tax relief strictly to confirmed capital investments in key sectors, including manufacturing, mining, agriculture, renewable energy, and agro-processing.
Qualified firms are entitled to a five percent annual tax credit on approved qualifying capital expenditure for a period of five years. This benefit may be extended to ten years where profits are reinvested entirely into the same line of production.
Marvis Oduogu, Lead for Taxation at Stren and Blan Partners, disclosed that many companies have already begun seeking expert advice to position themselves for the incentive. According to him, businesses are restructuring operations, entering strategic mergers, adjusting branch networks, and strengthening documentation systems to meet the eligibility criteria.
The EDI is expected to influence a large proportion of major formal-sector companies. The priority sectors covered by the incentive manufacturing, energy, mining, agriculture, and renewables collectively represent more than half of Nigeria’s corporate tax base, based on historical revenue data and participation under the former Pioneer Status Incentive.
Transfer pricing specialist Yvonne Afolabi also confirmed that firms are actively modifying their structures to comply with the new framework. She explained that the incentive’s design requires companies to demonstrate actual capital deployment before enjoying tax benefits, eliminating claims based on future plans or intentions. Investments must now be certified, verified, and traceable.
From a fiscal standpoint, the revised incentive structure aims to minimise revenue losses linked to broad tax exemptions. Responsibility for certification lies with the Nigerian Investment Promotion Commission, while beneficiary companies are required to keep detailed project-level records and file annual incentive returns with the tax authority.
Recent figures further justify the government’s review of tax incentives. Analysis of National Bureau of Statistics quarterly data for 2024 shows that corporate tax revenue remains heavily concentrated within a limited number of formal-sector industries, prompting authorities to reassess the overall cost and effectiveness of incentive schemes.
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