NEWS

FEC Decision for Foreign Investment: Transition to EDTI (January 2026)

As of January 2026, the Federal Executive Council (FEC) has moved from general "holidays" to a performance-based incentive system. For foreign interests in security and technology, the biggest shift is the sunset of the old Pioneer Status and the birth of the Economic Development Tax Incentive (EDTI).

1. The New "EDTI" Framework (Replacing Pioneer Status)

The Shift: Instead of a blanket 3-5 year tax holiday, you now receive an Economic Development Tax Credit (EDTC).

The Benefit: A 5% annual tax credit on qualifying capital expenditure for 5 years.

Why it matters: This incentivizes actual deployment of hardware and infrastructure (like surveillance systems or data centers) rather than just registering a company.

2. Incentives for "Securing" Critical Infrastructure

Infrastructure Tax Credit: If a foreign firm builds access roads, provides independent power (Solar/Mini-grids), or installs telecommunication towers in underserved areas (frequently those with security challenges), 20% of the cost is tax-deductible.

Security Equipment Manufacturing: Foreign firms setting up local assembly for security gear (drones, detection systems, firefighting equipment) are now high-priority for the EDTI, provided they meet a minimum investment threshold (typically N200 billion for large-scale utility/infrastructure players).

3. Tech & Cybersecurity "Safe Harbor" Incentives

iDICE Fund Participation: A $617 million program (supported by AfDB and AFD) is launching additional venture funds in 2026. Foreign tech firms partnering with local startups in the Security-Tech space (biometrics, encryption, surveillance AI) can access de-risked capital through these funds.

VAT Recovery for Manufacturers: Under the Nigeria Tax Act 2025, manufacturers of tech hardware can now recover input VAT on services and fixed assets—a major cash-flow win for foreign firms setting up local server farms or assembly lines.

Comparison: Old vs. New Incentive Regime (2026)

Model: Tax Holiday (Zero Tax) — Tax Credits (5% of CapEx/year)
Duration: 3 - 5 Years — 5 - 20 Years (Sector dependent)
CIT Rate: 30% (after holiday) — Planned reduction to 25% for large firms
Small Firms: N25m turnover limit — N100m turnover = 0% CIT
Requirement: Sector Labeling — Verifiable Capital Deployment

Strategic Outlook for Foreign Interests

The FEC's current logic is: "If you invest in our physical security and digital infrastructure, we will credit your tax bill." This reduces the Security Premium (the extra cost of doing business in a high-risk area) by allowing you to recover those costs through the tax system.