Discontinuation of the PSI
The Nigeria Tax Act 2025 repealed the Industrial Development (Income Tax Relief) Act with the Economic Development Tax Incentive (EDTI), effective 1 January 2026. Existing PSI beneficiaries are required to contact the Incentives Administration Division at NIPC for transition guidance.
The Pioneer Status Incentive (PSI) was a tax holiday which granted qualifying industries and products relief from the payment of corporate income tax for an initial period of three years, extendable for one or two additional years.
Provisions of the PSI
| Area | Treatment Under PSI |
|---|---|
| Corporate Tax | Full CIT exemption on PSI activities during the pioneer period |
| Capital Allowance | Deferred until post-pioneer period |
| Tax Losses | Net loss (aggregate of loss and profit) carried forward to post-pioneer period |
| Development Levy / Tertiary Education Tax | PSI companies exempt from Tertiary Education Tax |
| WHT on Income | PSI companies' income exempt from WHT deduction |
| Dividend Distribution | Exempt from WHT subject to conditions |
Why the PSI Was Repealed
The PSI was repealed in order to align with the Federal Government's broader fiscal and economic reform agenda, which seeks to ensure that incentives are better targeted, performance-driven, and aligned with national development priorities.
The new Economic Development Tax Incentive (EDTI) framework represents a deliberate shift from a predominantly time-based system to one anchored on performance and impact. It links tax relief to Qualifying Capital Expenditure, creating a proportional, scalable incentive that rewards the scale of investment rather than its classification.
Existing PSI Beneficiaries — Transition Guidance
- Existing PSI certificates remain valid for their current approved term Companies that received PSI certification before January 2026 shall continue to enjoy the reliefs applicable under the Act for the unexpired period as at the commencement of the NTA 2025.
- Contact NIPC for transition guidance NIPC's Incentives Administration Division can advise on transition arrangements, EDTI eligibility, and the application process for existing PSI beneficiaries.
