Executive summary

On 17 April 2026, Nigerian tax authorities provided clarification on the transition from the Pioneer Status Incentive (PSI) to the new Economic Development Incentive (EDI) regime, introduced under the Nigeria Tax Act 2025 (NTA). Nigeria's tax incentive landscape has experienced a significant shift following the enactment of the NTA, which came into force on 1 January 2026. One of the key changes under the NTA is the replacement of the PSI with the EDI.

In preparation for the transition and rollout of the EDI regime, the Nigeria Investment Promotion Commission (NIPC), in collaboration with the Nigeria Revenue Service (NRS) and the Industrial Inspectorate Department (IID) recently conducted joint sensitization engagements across the country to educate stakeholders and the general public on the EDI framework and its implementation, specifically including its integration into the soon-to-be launched Rev360 platform, where tax credits will be visible and trackable in real time. This digital approach is meant to enhance transparency and give both regulators and investors clearer visibility into incentive utilization.

Key developments

Under the NTA, the PSI regime previously governed by the Industrial Development (Income Tax Relief) Act (IDITRA) has been replaced with the EDI with effect from 1 January 2026. The PSI provided a blanket three-to-five-year income tax exemption for qualifying companies, whereas the EDI introduces a more performance-driven approach by linking incentives to actual capital investment and economic contribution.

The EDI is a tax-credit-based incentive framework designed to stimulate and attract investment into priority sectors of the economy. It aims to support a productive economic activity, and sustainable growth by granting a 5% annual tax credit on qualifying capital expenditure (QCE) for new investment. Key objectives of the scheme include attracting investment, supporting job creation, stimulating industrialization and ultimately encouraging value addition to the economy.

The NIPC remains the primary agency responsible for granting the incentive, subject to meeting the qualifying criteria as set out in the NTA. Eligibility is therefore largely dependent on whether a company operates within designated priority sectors listed in the Tenth Schedule to the NTA and also meets the QCE threshold.

The duration of the incentive is between 5 and 20 years with an initial 5-year incentive period and an additional 5-year utilization window, while the minimum QCE is between 250 million Nigerian naira (NGN250m) and NGN200b.

EDI: A new era for tax investment incentive in Nigeria

At a joint stakeholder engagement held in Lagos on 17 April 2026, implementing agencies provided clarity on the transition from the former PSI to the new EDI. The agencies emphasized that the new regime is not merely a rebranding exercise, but a deliberate move to create a more robust incentive structure while addressing past concerns around opacity and abuse by beneficiaries of the PSI.

To safeguard the integrity of the scheme, the NRS will play a pivotal role in ensuring compliance and preventing the misuse of the incentive. This oversight function is complemented by the work of the NIPC and the IID, which will be responsible for technical verifications, including the issuance of the EDI certificate and the critical determination of a company's official Production Day — a key reference point for incentive eligibility and benefit calculations respectively.

Impact on businesses and investors

The transition is particularly relevant for:

• Companies currently benefiting from PSI
• Local and foreign investors considering investments in Nigeria, depending on the sector of the economy
• Businesses operating within designated priority sectors
• Companies with qualifying capital expenditures that meet the prescribed thresholds under the NTA
• Entities involved in mergers, acquisitions or asset takeovers of PSI/EDI beneficiaries

Key sectors expected to benefit from the EDI include refining of crude oil and gas, manufacturing across diverse products, electricity and gas supply, renewable energy, mining and quarrying, waste management, music and motion picture production, and business process outsourcing (e.g., shared services).

Key steps

Companies should monitor ongoing developments and await further regulatory guidance, particularly with respect to transition arrangements for existing PSI beneficiaries and detailed compliance requirements under the EDI framework. Early assessment of investment plans and alignment with priority sectors and capital thresholds will be critical for businesses seeking to optimize available benefits under this new regime.

Affected businesses should engage with knowledgeable tax advisors for support on:

• Determining qualification under the EDI framework
• Structuring investments to meet applicable thresholds
• Managing the regulatory application and approval process on an end-to-end basis
• Navigating annual compliance and reporting requirements

Further, the NRS has indicated that its new Rev360 platform, which launched on 30 April 2026, will support the administration and implementation of the EDI process. Companies should watch for further updates in this regard, as the new platform will play an important role in facilitating compliance and interaction with the incentive framework.