According to the finance act, SMEs and other agricultural production businesses may be granted pioneer status for almost six years.
Punch reports, Small and medium sized companies engaged in primary agricultural production are to enjoy a tax free period of four years which may be extended for an additional maximum period of two years, the Federal Government has said.
It disclosed this in the recently signed Finance Act, 2020, adding that the affected companies would enjoy the tax exemption pursuant to an application to the President, through the minister.
The Act read in part, “Any small or medium sized company engaged in primary agricultural production shall be granted, pursuant to an application to the President, through the minister, an initial tax-free period of four years.
“This may be extended, subject to the satisfactory performance of such primary agricultural production, for an additional maximum period of two years, and such company cannot be granted similar tax holiday incentive under any other Act in force in Nigeria.”
The Act described a medium sized company as a company that earns gross turnover greater than N25,000,000 but less than N100,000,000 per annum, or as otherwise defined by the Companies Income Tax Act.
Providing explanation on primary agricultural production, the Act stated that this include primary crop production comprising the production of raw and semi-processed crops of all kinds, but excluding any intermediate or final processing of crops or any other associated manufactured or derivative crop product.
Others include primary livestock production comprising the production of live animals and their direct produce such as live or raw meat, live or raw poultry, fresh eggs and milk of all kinds, but excluding any other associated manufactured or derivative livestock product.
It also includes primary forestry production comprising the production of timber of various kinds such as firewood, charcoal, uncultivated materials gathered and other forestry products of all kinds, including seeds and saplings, but excluding the intermediate and final processing of timber and any other manufactured or derivative timber product.
It also includes primary fishing production comprising the production of fish of all kinds, such as ornamental fish, but excluding any intermediate or final processing of any other manufactured or derivative fish product.
The Act further described a small sized company as one that earns gross turnover of N25m or less per annum, or as otherwise defined by the Companies Income Tax Act.
Source: https://punchng.com/primary-agro-based-smes-get-fgs-four-year-tax-exemption/