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PIONEER LEGISLATION IN NIGERIA
The Pioneer Legislation is refers to the taxation of companies operating within ;pioneer
industries as certified by the Federal Executive Council of Nigeria in accordance with the
provisions of Industrial Development (Income Tax Relief) Act of 1971 as amended to date
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This period of tax
holiday is known as Pioneer Period
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PIIONEER CERTIFICATE
This is a certificate certifying a company to be a Pioneer Company
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It must state any additional products or byproducts as the case may be
and the reason for such application
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CANCELLATION OF PIONEER CERTIFICATE
A pioneer certificate previously granted may be cancelled on the occurrence of one or more of
the following events:
 Where the value of the qualifying capital expenditure is less than #50,000 for an
indigenously controlled company and #150,000 for other
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EFFEWCTIVE DATE OF CANCELLATION
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Where the company has been in the operation as a pioneer company for a period less
than one year after the pioneer date, then the effective date of cancellation will be the
pioneer date i
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it is assumed that the certificate were never granted
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THE LIST OF THE PIONEER INDUSTRIES AND THEIR PRODUCTS
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Manufacturer of ceramics
Manufacturer of cement
Manufacturer of leather
Manufacturer of textiles and man-made fibres
Manufacturer of glass and glass wares
Manufacturer of papers and paper pulps
Manufacturer of furniture material for export
Manufacturer of pharmaceuticals
Any other product as may be listed by the council

PIONEER PERIOD
This is the period in which the income of the pioneer company is exempted from tax
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Upon the expiration of the pioneer period, the company will be deemed to
have ceased the old business and commence a new business the next day after the end of the
pioneer period and so becomes chargeable to tax
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CONDITIONS FOR EXTENSION OF PIONEER PERIOD
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Where the board is satisfy with the rate of expansion, standard of efficiency and level of
the development of the company
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For the training and development of Nigerian personnel in the relevant industry
The relative importance of the industry in the economy of the nation and
The need for extension having regard to the location of industry
Any such relevant matter as may be required

This application should be made not less than one month after the expiration of its initial tax
relief period of three years

PIONEER STATUS BY LOCATION
Pioneer status by location is granted to companies located in the rural area whose location is
not less than 20km from normal facilities
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It is regarded as the
date of commencement of business for a pioneer company
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CONDITIONS FOR APPLICATION FOR PIONEER STATUS
For any application for pioneer certificate to be considered, the estimated qualifying capital
expenditure to be incurred must not be less than :
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#50,000 for indigenously controlled company
#150,000 for other companies

In addition, every application must state the following:
Whether the company is or shall be indigenously controlled
Particulars of qualifying capital expenditure incurred prior to or during the pioneer period
The place where the asset are to be located
The probable date of production day
The main product and by-product and estimate of their relative quantities
Particulars of loan and share capital including source, amount and issue date of capital
Names, nationality and address of promoters/directors and their shareholdings

PROFIT FROM NON PIONEER PRODUCT DURRING THE PIONEER
PERIOD
Where a pioneer company trades in non pioneer product during the pioneer period such profit
derived there from shall be fully subjected to tax under the relevant tax laws
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TREATMENT OF LOSSES INCURRED WITHIN PIONEER PERIOD
A net loss incurred by a pioneer company during pioneer period shall be deemed to have been
incurred on the day on which its new business commences i
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the day following the expiration
of the pioneer period
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DIVIDEND
Dividend declared by a pioneer company during its pioneer period is exempted from all forms of
taxation
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Step 2: Adjust the profit of the new business, if disallowable expenses had been charged before
arriving at net profit
Step 3: Compute the assessable profit of the new business for the relevant year, taking into
consideration application of commencement rule
Step 4: Compute capital allowance for the year
Step 5: Compute tax liability for the relevant year

STEPS INVOLVED IN DETERMINING THE PIONEER PERIOD FOR AN
OLD BUSINESS THAT HAS BEEN GRANTED A PIONEER STATUS
Step 1: Identify the date when pioneer status is granted to the existing business
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This represent the date when the old business
is deemed to have ceased operation
Step 3: Identify the penultimate and ultimate year of assessment under cessation rule using the
information in the step 2
Step 4: Determine the basic period for assessable profit and compute the assessable profit
under the cessation rule
Step 5: Determine the basis of assessing the tax payer under the rule
Step 6: Determine the pioneer period of the pioneer business by choosing a period of three
continuous years effective from production date
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A pioneer company is no exception to this return
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A period not exceeding one year commencing from the production day
Successive period of one year thereafter
A period not exceeding one year ending at the date when the tax relief period ends
In the case of the new trade or business, the opening figure of these accounts shall be
the closing figures as shown in its last accounts of the tax relief period
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The examination is ti ensure that the pioneer
company does not exploit its status to evade tax on its profit arising from its non pioneer
activities
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Certify the qualifying capital expenditure at the end of each accounting period
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Ensure the reasonableness or fairness of the charges in respect of remuneration paid to
the directors of the company, interest service, agency or other similar charges made to
person who are shareholders of the company
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Direct how certain receipts and expenses should be treated
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The act gives the tax authority the
power to direct that receipt which are part of the pioneer profit but which should have been
treated as profit of the following period be so treated and that expenses incurred in the first
year of the new trade are properly attributable to the tax relief

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