How businesses can access Nigeria’s new 5% investment tax credit

Nigeria’s new investment tax incentive could help eligible companies reduce their tax bills as they expand production, but businesses must meet sector-specific investment thresholds and complete a three-stage certification process that takes an estimated 16 weeks.

Vincent Okoukoni, associate director, commercial practice at Andersen, said tax incentives have historically helped attract domestic and foreign investment, boost exports, and generate employment. The challenge for businesses, however, is determining whether their planned investments qualify and how much tax relief they can actually claim.

“Tax incentives have facilitated essential domestic and foreign direct investment, boosted export earnings, and generated employment opportunities for Nigeria’s growing population,” Okoukoni said.

The Economic Development Tax Incentive (EDTI), introduced under the Nigeria Tax Act 2025, replaces the former Pioneer Status Incentive, which offered qualifying companies an initial three-year corporate income tax holiday, extendable by one or two years.

Under the new framework, eligible companies can receive a tax credit of 5 percent per annum on qualifying capital expenditure for five years, subject to statutory conditions. This shifts the focus from a time-based tax holiday to relief linked to qualifying investment in designated priority sectors.

For a company with N2 billion in eligible qualifying capital expenditure, the 5 percent rate would amount to N100 million in annual tax credit, subject to the statutory calculation and utilisation rules. The commercial benefit depends on the company’s tax liability, the timing of the credit and whether it can use the credit against tax payable.

Ajibola Sogunro, tax partner at Forvis Mazars, said the effectiveness of the scheme should be measured by its contribution to investment and economic activity rather than the number of companies approved.

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“We are basically looking at the contribution of the applicant to investment and, ultimately, economic development,” Sogunro said during a webinar on the implementation of the incentive.

His point highlights a key test for the new framework: whether the tax relief encourages companies to commit capital to productive activities, rather than simply rewarding businesses that would have invested anyway.

How businesses can apply

The Nigerian Investment Promotion Commission (NIPC) administers the application process, with the Industrial Inspectorate Department (IID) and the Nigeria Revenue Service (NRS) responsible for subsequent certification stages.

According to the NIPC, the typical processing period is 16 weeks. The commission allocates eight weeks to application submission and preliminary screening, four weeks to certification of the production day and determination of qualifying capital expenditure by the IID, and another four weeks to certification of qualifying expenditure by the NRS.

The timeline means companies need to factor the application and certification process into their investment planning. Businesses should also confirm the applicable requirements before committing funds, particularly where eligibility depends on the type and value of qualifying capital expenditure.

Who qualifies?

Eligibility is not automatic for every company operating in Nigeria. The Nigeria Tax Act’s Tenth Schedule identifies priority sectors, eligible products and services, minimum qualifying capital expenditure thresholds, and applicable sunset periods.

The listed activities cover areas including agro-processing, manufacturing, infrastructure, utilities, mining, digital technology, media and entertainment, and waste management. The minimum investment requirement varies by eligible activity, so companies must establish whether their specific business and proposed expenditure meet the relevant conditions.

The NIPC’s application guidelines, issued in July 2026, provide details on applications, due diligence, certification, and the obligations of beneficiaries. Companies should use the guidelines and the statutory schedule to determine their eligibility rather than assume that operating in a broadly eligible industry is sufficient.

For businesses weighing new investments, the incentive’s value will depend not only on the size of the tax credit but also on whether their planned expenditure meets the statutory requirements and how quickly they can complete the certification process.

Under the Nigeria Tax Act 2025, an incentive certificate may be cancelled if a company fails to commence production within 12 months of its proposed production day. This makes the timing of investment execution and compliance an important consideration for companies seeking to benefit from the scheme.

The key question for prospective applicants is whether the value of the credit justifies the cost and administrative demands of qualifying for it.

For the government, the bigger test will be whether the incentive supports additional capital spending and productive capacity, rather than merely reducing the tax bills of companies that would have invested anyway.