Honeywell Flour Mills has claimed a company income tax (CITA) waiver valued N10.4bn over the pioneer status on its Sagamu Plant in Ogun State, the company’s books have revealed.
The company which is famous for its products like semolina, flour, whole wheat meal, noodles and pasta, said in its audited financial statement for 2023 that it considered the derecognition of the N10.4bn deferred tax as a key audit issue.
The Pioneer Status incentive grants companies carrying out certain approved activities a tax holiday period from Companies Income Tax (CIT) for an initial 3 years and could be extended for another 2 years.
The regulations supporting the regime are the Industrial Development (Income Tax Relief) Act (IDITRA) of 1971 and the Pioneer Status Incentive Regulations of 2014.
The government agency that regulates the incentive is the Nigerian Investment Promotion Commission (NIPC).
But the Finance Act 2022 was adjusted to phase out the incentive described by the former Minister of Finance Budget and National Planning, Zainab Ahmed as ‘antiquated’ and counterproductive.
Ahmed had said the Finance Act 2022 would phase out incentives like the “antiquated pioneer (status), and other tax incentives for mature industries and moving a revised set of incentives for real infant industries.”
The move would help the government save more revenues, which would help it fulfill its fiscal obligations in 2023.
Honeywell said in its books that it “reviewed the justification for the derecognition/release of the N10.39bn from the company’s deferred tax liability” before taking the decision.
The new administration headed by Bola Ahmed Tinubu has said borrowing is not an option for Africa’s biggest economy as it hopes to widen the tax bracket and “make everybody” to pay tax.
Taiwo Oyedele, the Chairman of President Bola Tinubu’s Committee on Fiscal Policy and Tax Reform said after his inauguration that when giving incentives, “Ask yourself whether these incentives are productive.
“If you give away N1 and you are getting less than N1 in return, then maybe it is time for you to review the incentives.”
Honeywell’s Shagamu Plant began operation between 2018 and 2019 with four pasta lines and an annual capacity of about 140,000 metric tonnes per annum.
