Federal Government Ensures Transitional Protection for Investors as New Tax Regime Rolls Out in 2026
The Federal Government has confirmed that 149 companies currently enjoying pioneer status incentives will retain their tax holidays for at least two more years, even as Nigeria prepares to implement a new tax framework starting January 2026.
The announcement was made by the Nigerian Investment Promotion Commission (NIPC) during a media briefing in Abuja on Thursday, with officials noting that existing beneficiaries will be safeguarded under transitional provisions of the new system.
According to the commission, the Pioneer Status Incentive (PSI) has attracted approximately N8.7 trillion in capital investments since 2017 and created 58,897 direct jobs, predominantly in manufacturing and concentrated in Lagos State.
A review of PSI administration shows that between 2017 and the second quarter of 2025, 693 applications were submitted, 304 were approved, 64 denied, and only one certificate cancelled, leaving 149 active beneficiaries under the incentive.
With the retention policy, these companies will continue to enjoy tax exemptions for a minimum of two years, following a government directive to protect firms already granted pioneer status.
“This decision is intended to safeguard investor confidence and ensure a smooth transition to the new tax regime,” said Taiwo Oyedele, Chairman of the Presidential Tax Reform Committee.
During the briefing, Uchenna Okonkwo, an official of NIPC’s Incentives Administration Division, explained that the PSI, which provides full corporate income tax relief for three years, extendable by two, will gradually phase out under the new tax framework.
“From 2017 to the second quarter of 2025, we received 304 requests for PSI grants, denied 64, and cancelled one certificate, leaving 149 companies as current beneficiaries,” Okonkwo said.
The PSI, offered under the Industrial Development Income Tax Act, exempts eligible companies typically new or pioneering ventures from paying income tax for a defined period. While it has been instrumental in stimulating industrial growth, the incentive has drawn criticism for significant revenue losses, reportedly costing the government around N8 trillion annually.
Under the new system, the PSI will transition into the Economic Development Incentive, a tax credit-based structure designed to encourage long-term investment, capital reinvestment, and sector-specific growth. Companies will continue paying taxes but can earn credits tied to capital expenditures, with some eligible for up to 15 years of relief depending on reinvestment performance.
NIPC’s Executive Secretary and CEO, Aisha Rimi, represented by Director of Strategic Services, Abubakar Yerima, highlighted the growing investor confidence in Nigeria’s reform agenda, noting that the commission facilitated over $10 billion in investment commitments in 2025.
Capital importation rose to $5.2 billion in Q1 2025, up from $3.4 billion in the same period in 2024, while total inflows in the first half of the year reached $10.23 billion, driven by manufacturing, ICT, agro-processing, renewable energy, and services sectors.
Rimi also shared that in the second quarter, 17 companies were granted pioneer status, mobilizing $809.57 million in capital and creating over 3,000 direct jobs, with further approvals in the third quarter generating more than 2,400 additional jobs.
Commenting on the briefing, Ifeanyi Onuba, Chairman of the Commerce and Industry Correspondents Association of Nigeria, praised the NIPC for enhancing media engagement, emphasizing that accurate reporting is crucial for investor confidence and economic growth.
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