Tax Incentives and Exemptions under the CIT Act: Opportunities for Businesses in Nigeria.


The Nigerian government recognizes the crucial role businesses play in driving economic growth and development. To encourage investment and stimulate specific sectors, the Company Income Tax (CIT) Act provides various tax incentives and exemptions. As a reputable accounting firm, we aim to highlight these opportunities for businesses in Nigeria, showcasing the benefits of leveraging tax incentives and exemptions to enhance financial performance and contribute to the country’s economic prosperity.

Tax Incentives and Exemptions Available:

1. Pioneer Status Incentive: The Pioneer Status Incentive is granted to companies operating in certain industries or engaging in specific activities deemed vital for economic growth. Companies awarded pioneer status enjoy a tax holiday for an initial period, during which they are exempt from paying CIT. The initial period can extend for up to five years, subject to approval by the Nigerian Investment Promotion Commission (NIPC) and renewal considerations.

Implication: Companies with pioneer status can allocate more resources to investment, research, and development, fostering innovation and driving sectoral growth.

2. Export Expansion Grant (EEG): The Export Expansion Grant is designed to promote non-oil exports by reimbursing qualifying exporters with export proceeds. Companies engaged in non-oil export activities can receive up to 30% of their export proceeds as a grant, further incentivizing international trade.

Implication: The EEG facilitates export-oriented businesses, enabling them to expand their reach in international markets while increasing foreign exchange earnings for the country.

3. Capital Allowances: The CIT Act allows businesses to claim capital allowances on qualifying capital expenditures, such as machinery, equipment, and buildings used for business purposes. Capital allowances reduce the taxable income and, in turn, the tax liability of the company.

Implication: Companies can optimize their tax positions by deducting eligible capital expenditures, thereby freeing up funds for reinvestment and growth initiatives.

4. Agriculture and Agro-Allied Tax Incentives: Recognizing the importance of agriculture in Nigeria’s economy, the government provides various tax incentives and exemptions for businesses engaged in agriculture and agro-allied activities. These incentives aim to support food production, processing, and value addition in the agricultural sector.

Implication: Agricultural businesses can benefit from reduced tax burdens, encouraging more investments in this critical sector.

5. Research and Development (R&D) Tax Credit: Companies involved in research and development activities can claim tax credits for qualifying R&D expenses. The R&D tax credit promotes innovation, encouraging businesses to invest in technological advancements and product development.

Implication: The R&D tax credit fosters a culture of innovation, supporting businesses in Nigeria to remain competitive on a global scale.


Tax incentives and exemptions under the Company Income Tax (CIT) Act offer significant opportunities for businesses operating in Nigeria. Leveraging these incentives can result in reduced tax liabilities, increased cash flow, and enhanced competitiveness. As a leading accounting firm, we encourage businesses to explore these opportunities to optimize their financial performance while contributing to Nigeria’s economic growth.

However, navigating the complexities of tax laws and ensuring compliance with relevant provisions can be challenging. We recommend seeking professional guidance from reputable accounting firms or tax experts to maximize the benefits of tax incentives and exemptions effectively. By taking advantage of these opportunities, businesses can play an active role in driving sustainable development and prosperity for Nigeria’s economy.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.