With the geometric increase in the number of persons infected with the coronavirus disease, there has been reactionary measures to ensure that economic activities remain a steady progress. Remarkably, the health sector has benefitted the most from these measures. Clearly, Nigeria’s trajectory is to ensure that at all cost the health sector does not suffer a collapse. This objective has led to several palliative measures from zero tariff as proposed in the Emergency Economic Stimulus Bill to CBN intervention funds for the health sector and most recently, the Nigerian Investment Promotion Commission (NIPC) announced that several activites in the medical and pharmaceutical sectors qualify for tax holidays.
There is no question that the stability of Nigeria’s health sector is pivotal to its success against the pandemic and so the government intends to encourage public investment in this sector by doing all it can to shoulder liabilities on interested individuals.
On the 14th of April, 2020, the NIPC announced several activities in the medical and pharmaceutical sectors qualify for three to five years company income tax holiday under the Pioneer Status Incentive (PSI) scheme.
The Pioneer Status Incentive was established by the Industrial Development (Income Tax Relief) Act, No 22 of 1971 and is a tax holiday which grants qualifying industries and products relief from payment of corporate income tax for an initial period of three years, extendable for one or two additional years.
Companies that qualify for this tax holiday are those involved in the following activities:
1) manufacturing of pharmaceutical and medical products e.g. antibiotics, medical impregnated wadding, gauze, bandages, dressing etc;
2) manufacturing of Irradiation, electro medical and electrotherapeutic equipment e.g. pacemakers, hearing aids, medical laser equipment;
3) manufacturing of medical and dental equipment and supplies e.g. surgical drapes, sterile string and tissue, distilling apparatus, dental instruments;
4) construction and operation of non-residential buildings e.g. specialised hospitals, diagnostic centres, and laboratories.
The above is for informational purposes only and does not constitute professional advice by Blackwood & Stone LP.
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Blackwood & Stone LP
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