Introduction
Tax incentives have long been a central feature of Nigeria’s economic and fiscal policy. Like many developing economies, Nigeria has historically used fiscal incentives to stimulate investment, promote industrialisation, encourage business expansion, and attract foreign direct investment. Through measures such as tax holidays, exemptions, capital allowances, and reliefs, government seeks to reduce the cost of doing business and support economic growth.
Nigeria’s tax incentive landscape underwent a significant transformation with the enactment of the Nigeria Tax Act 2025 (“NTA”), which took effect on 1 January 2026. One of the most notable reforms introduced by the Act is the replacement of the long-standing Pioneer Status Incentive (“PSI”) regime with the Economic Development Tax Incentive (“EDTI”). The EDTI reflects a fundamental shift in policy. Rather than granting broad tax holidays based primarily on sector eligibility, the new framework links incentives to actual capital investment, reinvestment, and measurable economic contribution. This article examines the transition from the PSI regime to the EDTI, the eligibility requirements for the new incentive, and its implications for businesses and investors.
