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Why Nigeria’s Crypto-Friendly Company Flutterwave was Denied Tax Incentive

Image Credit: Kabiru Yusuf (Bitcoin and regulations)

On Flutterwave;

Flutterwave, a fin-tech company based in Lagos and San Francisco that provides payment infrastructure for global merchants and payment service providers across the continent, recently had its application for a Pioneer Status Incentive (PSI) denied by the Federal government. It is no news that Flutterwave has made its mark in the digital space as a fertile startup group that aids tons of dealers and foreign businesses in actualizing digital payments that transcend borders through a smooth mechanism. It is, therefore, no surprise that the company keeps growing in leaps and bounds. 

Earlier this year, it joined the league of top companies like Apple, Microsoft, Pfizer, Netflix, Facebook among others in TIME’s list of 100 most influential companies creating critical impacts across the globe. It has also partnered with Binance, a leading crypto-exchange platform to bridge the fiat-to-crypto currency gap. By this, Nigerians can purchase cryptocurrencies directly with the Naira. 

Why then is PSI important? 

The Pioneer Status Incentive (PSI) is a program set up by the Industrial Development (Income Tax Relief) Act, No. 22 of 1971 to promote increased investments in the economy. It is simply a form of tax holiday. And this incentive seeks to stimulate growth by granting an income tax exemption to qualified companies in key sectors of the economy. 

Furthermore, this exemption can either be a full or partial one and is made available for a period of (5) five years (an initial 3 years, renewable for another 2 years). The Pioneer Status Incentive is regulated by the Nigerian Investment Promotion Commission (NIPC) and its Exec. Secretary, Ms Yewande Sadiku in a statement remarked that the commission had entered into multiple partnerships with the private sector in a bid to harness potentials in the country. So why then was Flutterwave denied a chance at a Pioneer status certification? 

It was revealed that several reasons contributed to the rejection of a company’s application for PSI — ranging from having an ineligible business activity, submitting a request later than required et al. In the words of Emeka Offor, the director of strategic communication at NIPC; “The Industrial Development Act gives guidelines and one of the requirements is that an applicant for pioneer status or tax relief must make an application in the first year of production or service delivery, which most of them failed to do… In the case of Flutterwave, for instance, they applied within the third year of operations. Therefore, it is time-bound, according to the Industrial Development Act. Some other firms who had their applications for tax reliefs declined had a similar concern.” Hence, it was gathered that (3) three firms were approved in principle, while six were granted a full three-year certification. In this category, we have groups like Tiamin Rice Ltd, Medlog Logistics Ltd, African Foundries Ltd, Aarti Rolling Mills Ltd, Pan Africa Towers Ltd and Princess Medi-clinics Nig.

Some of the companies whose requests were also rejected included Flour mill of Nig., Benchmark Constructions Ltd, Envoy hotels, Al-hamsad Rice mills Ltd and a host of others. 

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