TABLE OF CONTENTS
TABLE OF CONTENTS
LIST OF TABLES
Background of the study
Statement of the problem
Purpose of the study
Significance of the study
Delimitations of the study
II REVIEW OF LITERATURE
Definition of Pioneer Income Tax Relief
The Legal Framework
Pioneer Companies under the Nigeria Tax Law
Conditions for Granting Pioneer Status
Qualification and Requirement for Application for a
Advantages of Pioneer Status
Terms of Pioneer Certificate
Pioneer Account and Tax Relief
Functions and Power of Investment Incentives
Main and Other Tax Incentives in Nigeria
Source of data
Area of coverage
Population of the study
Sample of the study
Administration of the instrument
Data analytical technique
IV PRESENTATION AND ANALYSIS OF DATA
Test of Hypothesis
V SUMMARY, CONCLUSION AND RECOMMENDATIONS
LIST OF TABLES
Table 1: Analysis and interpretation of question 1
Table 2: Analysis and interpretation of question 3
Table 3: Analysis and interpretation of question 4
Table 4: Analysis and interpretation of question 7
Table 5: Analysis and interpretation of question 8
Table 6: Analysis and interpretation of question 9
Table 7: Analysis and interpretation of question 10
Table 8: Analysis and interpretation of question 11
Table 9: Analysis and interpretation of question 12
Table 10: Analysis and interpretation of question 16
Table 11: Analysis and interpretation of question 17
Table 12: Analysis and interpretation of question 20
Table 13: Analysis and interpretation of hypothesis 1
Table 14: Analysis and interpretation of hypothesis 11
Table 15: Analysis and interpretation of hypothesis 111
Table 16: Analysis and interpretation of hypothesis 1V
The study critically examined and evaluated the relevance of pioneer income tax relief as an alternative Investment incentive to companies. Primary data were collected from fifty three existing pioneer industries in ondo state. Simple percentage was used to analyses the data collected while T-test was used for the test of the hypothesis formulated. It was discovered from the analysis that income tax relief was a major factor in the establishment of pioneer companies and also plays a contributory role in the proliferation of such companies. Also from the hypothesis we discovered that investment have not actually harnessed the potentials inherent in pioneer income tax relief due to their level of awareness. The study was concluded by recommending that conditions attached to the granting of pioneer status be reviewed and bureaucratic process involved in granting the status eliminated.
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Background of the Study
Thisstudy is an attempt to discuss the various issues relating to pioneer income tax in Nigeria. Using fifty three  existing pioneer companies in ondo state.
The history of taxation in Nigeria dates back to the era of Sahara trade and the introduction of Islamic–religion in Nigeria were made between 500AD and 1400AD. The rulers in the northern Nigeria were known as ‘‘SAFAWA’’ kings, who grew rich due to gifts and levies paid to the subordinate as taxes on cattle and agriculture crops. The Islamic religion later introduced other various forms of taxes.
Though the first legal backing of taxation was in 1904 when Sir Fredrick laggard introduced the native revenue proclamation. [ICANstudent’s journal.July/Sept 2007 Vol 11, No3Page 15].
Pioneer companies are companies certified by any pioneer certificate to be a pioneer company which enjoy the tax holiday for at least five years, is granted to companies with pioneer status on the basis of newness and relevance of the products of the companies. The enabling law that gives power to the federal republic of Nigeria to grant this relief is the industrial development income tax relief act of 1970 [NOW cap 179.LFN, 1990].[Nworji 2004]. Going by the meaning of pioneer income tax relief, one would say that there are supposed to be a lot of pioneer companies around us. But the reverse is the case. For instance Ondostate where the companies used as case studies is situated, how many pioneer companies used as a case studies do they have and how many operational. The information from ministry of commerce and industry revealed that, though 53 of the industries are pioneer industries yet they are not operational. Some are moribund, otherunder privatization.
The essence of pioneer income tax relief was to encourage the development and establishment industries that will use our local raw materials in manufacturing different product like Oluwa glass plcIgbokoda, its source of raw material was in Igbokoda yet the company is not working in full capacity for sometimes now.
Some of the small scale manufacturers don’t even have the knowledge of the tax reliefs.
From the study there are one hundred and seventeen  industries scattered in the eighteen  local government area of Ondo state. Out of which fifty three  are engaged in the manufacturing of pioneer products, while the remaining are in other different types of business. Despite the fact that government want to use the relieve as incentive to encourage investor to go into local manufacturing and trade to enhance economic growth, yet our investors are not taking the advantage.
Brief History of the State
Ondo state was created on 3rd February 1976 with akure as the state capital line between longitudes 4’’ 30’’and 6’’00’’ East of the green wish meridian and latitudes 5’’ 45’’ and 8’’ 15’’ North of the equator. OndoState is entirely within the tropics. It is surrounded by Atlantic Ocean in the South, Ogun and OsunStates in the West, Ekiti state in the North, Edo and Delta state in the East with over 10,595 square kilometers in Nigeria. The geographical landscapes comprise lowland and rugged hills with granite outcrop in several places.
Brief History of two Of the Companies UnderStudy
Okitipupa Oil Mill Industry Plc.
Okitipupa oil mill industry is a 20tonnes capacity plant located in Okitipupa Local Government Area of Ondo State. The oil palm industry was established as a project by World Bank, federal government and the southern region then in 1968. The oil palm estate as was called had ten plantations that cover three local governments in the state. OkitipupaLocal, Irele Local Government and EseOdo Local Government Area. Under Okitipupa, it has seven estates namely Igbotako, Ilu Titun, Ikoya, Aye, Okitipupafarm settlement, Erinye and Isowa. Under ESEOdo, it has Apoi estate, under Irele, it has two, Ireleand Iyan San Estate.
Though Irelewas the first local government where oil mill was located and that prompted the then government to establish the oil mill there due to nearness of raw material. And as a result, oil mill Irelewas part of the company established. In 1974 oil mill Okitipupawas commissioned and the Nigeria joint agency limited [NJAL] was appointed to manage the company until 1981. And it was after then that the company had its own board of directors.
In 1976 the company was incorporated as a limited liability company. In 1989, it went into capital market and became public limited company [PLC] in 1990.
Though at present the company is under receivership as a result of loan secured in 2007 which it was unable to pay back and now the company is not working at full capacity.
It has different departments like agricultural service department, processing department, administration and personnel department, accounts and commercial departments with about 1526 employees. The company produces red oil and palm kernel and both have high market demand.
Stanmark Cocoa Processing Company Limited [SCPC]
Stanmark Cocoa Processing Company Limited is a 12,500 tones capacity plant located in Ondo town, Ondo state and about 275km from Lagos, Nigeria. Ondo state account for about 70% of Nigeria Cocoa output. So the company is located right in the heart of its main source of raw materials.
The company was established in 1953 under aegis of British administration to supplement the high demand for cocoa products in the international market. The company started production at a low capacity with the aim of buying cocoa seeds from the then farmers, packaging same and exporting them to Europe and other countries of high demand, with the work force of about seventeen indigenous workers and four foreigners the company could not explore the cocoa potentiality of their host religion and its environs, hence was not able to make up the challenge posed by the high demand and in the international scene. And this made it not to create a niche in cocoa production as at then.
However, in 1975 after the exit of foreigners in Nigeria cocoa market, experienced indigenous cocoa merchants came together and took over the company with the sole aim revitalishing it and doggedly taking over the cocoa market and that marked the birth of Stanmark cocoa processing company limited. The key stakeholders looked tirelessly to take over the market share in cocoa production and thereby moved from mere stock.
The climate is tropical with two distinct seasons, the rainy season [April-October] and dry season [November-March]. The annual rainfall varies from 200cm in the southern part of the state to 1.151cm in the northern area. Rainfall decrease in amount and distribution from the coast to the hinder land.
The people of the state are mostly Yoruba, comprising mainly the Akoko, Owo, Ondo, Ikale, Ilaje and Akure ethnic groups. Others inhabitant are the apices and arogbos who are ijaw. Generally the people of the state have same way of life; including culture, tradition, and costom.Thelanguage of communication are Yoruba, Ijaw, and English.
The 1991 census puts the population of the state at about 2,249,071 Withgrowth rate of 2.8% per annum about 45% of the population lives in urban areas while 55% lives in the rural areas.
Agriculture is the main occupation of the people providing income and employment for over 75% of the population of the state. It also contributes over 70% of the state’s grossdomestic product [GDP]. The main cash crops are cocoa, palm products and timber.
Moreover, the riverine areas of the state specialize in fishing, lumbering, beat building and gin production. There are large scale industries in the state, which are mainly government owned, or where it is largest shareholder. These include oluwa glass at igbokoda, oil palm factories and plantation at okitipupa, irele, and igbotako other are NIROWI wood company, premier metal industry both at ondo, cocoa Product Company in the riverine area. Bitumen also bounds ode irele and okitipupa local government area.
The small scale industries are mainly private initiatives.
These include poultry, bakery, sawmills, metal fabrication outfits, woodworks and carpentry. Some people find employments in the civil service and other private concerns which specialize in profession such as tailoring and cloth weaving [ASO-OKE]. The industrial climate of the state is favorable and as a result, prospective industrialists in the state can benefits from an array of mineral resources that abound them.
Prominent among the mineral resources already identified are bitumen and tairs in the southern part of the state, clay at Erusu in Akoko north- east and at Alade others include granite at Idanre,iron ore at Akunnu and Akungba in Akoko south- west local government transportation with the state is facilitated by a good road network. There is an airport located at Akure, the state capital-most town in the state are linked by tarred road and also the marble at supare.
A variety of tourist-attractions abound in the state. The popular ones include Idanre hills located at Idanre, Oke-Maria at Oka-Akoko, EbomiLakein Ipesi and the Ayetoro holy apostle’s community island. Having taken an overview of Ondo state, one could rightly conclude that there has been a remarkable economic development considering what it was by February, 1976.
Consequently, since small scale industries were set up primarily to promote productive activities in the rural settings, boast the industrial potential of the state at the grass roots, therefore, there is need to evaluate the relevance of pioneer income incentive to the industries and exporting of cocoa seed to processing with the new wide horizon of its responsibilities, the company sky-rocketed its work force from about twenty-eight to three hundred and eighty-five comprising of administrative officers, factory workers, field workers[farmers] and distributors of their products.
The renaissance rekindled the interest of the international community and consequently marked a new dawn in cocoa business in Nigeria. The mavice continues to grow in strength and capacity fill many countries depended on Nigeria to meet their cocoa raw materials needs.
In the middle of eighties, the company suffered a major setback due to global economic crisis. It is foreign allies who were their major consumer withdraw and as a result, it’s teeming workforce of about one thousand seven hundred and ninety five [1,795] were laid off to about two hundred and fifteen  and this brought the market to a standstill. The company continued to stagger on the path of recovery till in 1992 when cads bury Nigeria plc.Embarked on a redemption move to salvage the company from its economic quagmire by buying 98% of its share capital. And that made the company till today to be a subsidiary of cad bury Nigeria plc. Thereafter, it widened its product line which now include cocoa cake, cocoa butter, cocoa powder, and major, if not the only producer of cocoa liquor which has the European economic standards for cocoa. Liquor and the only company in Nigeria trading on cocoa liquor on the London terminal market.
Statement of the Problem
The act which established industrial development income tax relief of 1970[NOW CAP 1791FN] 1990 according to Nworyi  has it purpose to encourage the growth of our local industries that produce pioneer products. The aim of the government was to have enough of the industries listed as pioneer industries in order to help boast the economy and development of new or relevant industries that will reduce the countries dependent or importation of essential goods and service. Yet, we have not had enough of them till now.
Some of these industries that exist are not effectively in operation while some had gone moribund despite the fact government made a provision for them. However, the act was enacted encourage investors to go into production of the pioneer product to enhance economic development not only to Nigerian investors but also to foreign investors.
In ondo state, a survey of industries shows that some of them had gone into extinction. Moreover, investors seem not to be interested in establishing these industries that enjoy pioneer relief. However, it seems researcher had not gone into this area of study.
It is therefore the intention of this research study to investigate the relevance of the pioneer income tax as an alternative investment incentive on the growth of pioneer industries in ondo state.
Purpose of the Study
The objective of this research work isan evaluation of the relevance of the pioneer income tax relief on pioneer companies.
The sub objectives are:
1. To know whether pioneer relief stimulates economic development by encouraging massive establishment of pioneer industries
2. To know whether pioneer relief provides an investment incentives to foreign investors
3. To know why most of the investors are not going into pioneer products?
4. To know why till now they do not have enough pioneer in the state?
5. Moreover, to evaluates the essence of the incentives by the government.
Significance of the Study
The research work will afford students, industrialist and the general public the opportunity to know the relevance of the pioneer income tax relief as an alternative investment incentive.
It will help the users to know the important of pioneer income tax and how to go about it in enhancing the growth and development for our new companies.
Delimitations of the Study
The scope of the study is Ondo State while the fifty-three  existing companies in the state will serve as the population of the study.
Therefore the researcher will not attempt to discuss the overall relevance of the pioneer income tax relief of the whole companies in Nigeria nor that of any other country of the world.
(1) To what extent are investors aware of the existence of pioneer relief?
(2) Why do Nigeria investors prefer non-pioneer industries?
(3) What is the relationship between the pioneer relief as an incentives and industrial growth, economic development?
(4) To what extent does the pioneer relief as an incentive encourage foreign investment in Nigeria?
(5) To what extent is pioneer relief to companies fulfilling the objectives for which it was establish?
H01: Nigeria investors are not significantly aware of the existence of pioneer relief.
H02: Nigeria investor’s preference for non-pioneer industries has no relationship with pioneer relief.
H03: There is no significant relationship between income tax relief granted to pioneer companies and investment flow of foreign equity.
H04: There is no significant relationship between income tax relief to pioneer companies and investment improvement of the companies.