Nigeria Plans New Tax Incentives to Boost Agriculture, Energy Investments

This is part of a new scheme known as the Economic Development Incentive (EDI), which will address long-standing inefficiencies in the current Pioneer Status Incentive (PSI).

The proposed investment-driven incentive framework is designed to stimulate real economic activity by tying tax relief directly to verifiable investments and part of the country’s ongoing tax reform efforts.

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, disclosed this in a keynote address at BusinessDay’s Policy Intervention Series held on Tuesday, April 22 in Lagos.

He said a review of the PSI revealed structural flaws that have undermined its effectiveness.

“Once granted a pioneer status, companies may import goods classified as pioneer products tax-free, effectively allowing them to operate without tax obligations—even with minimal value addition to the economy,” he said.

The incentives will mainly be in the form of a multiyear tax credit that companies can use to reduce what they owe the government, Mr Oyedele further explained.

He said investments in sectors including agriculture, energy and manufacturing will enjoy the tax credit based on a prescribed minimum amount of investment for a period ranging from 10 to 20 years.

Mr Oyedele also reiterated that the country has initiated reforms to boost tax revenue as a share of gross domestic product to 18 per cent by 2027 from 13.6 per cent in 2024, adding these proposals seek to drive growth in priority sectors of the economy.

Also, investors in utility projects like power, waterways and ports will have to invest at least N200 billion to qualify for the tax credit.

He explained that if a company invests N10 billion in Year 1, it earns a N500 million tax credit each year for five years and if an additional N5 billion is invested in Year 2, that new investment begins its own five-year 5 per cent cycle—N250 million annually until Year 6 and if the company continues investing progressively, each round of investment starts a new five-year cycle of tax credits, potentially extending the benefit period up to 10 years.

The tax maven further stated that if a business has a N15 million tax liability in a given year and applies N25 million in tax credits, its liability is wiped out entirely, with the N10 million balance rolled over to subsequent years and that if a company fails to follow through on its investment plan or halts capital deployment, unused credits are forfeited and this accountability mechanism ensures that only consistent and credible investments are rewarded.