The discontinuation is part of a broader shift toward a new scheme, the Economic Development Tax Incentive (EDTI), which will come into effect on January 1, 2026.
Under PSI, eligible companies typically in sectors like manufacturing, agriculture, infrastructure, and technology enjoyed 100% exemption from Company Income Tax for an initial period of three years. That exemption could be extended for up to two more years (i.e. total up to five years), subject to regulatory approval.
The objective was to encourage investment in sectors deemed vital for economic diversification and industrial growth.
Under EDTI, incentives will no longer be in the form of full tax holidays. Instead, qualifying companies will receive a 5% annual tax credit on eligible capital expenditures (i.e. investments) over a five-year period, meaning a total potential 25% tax credit over five years.
EDTI is more targeted, it applies only to “priority sectors” and includes minimum investment thresholds for certain capital-intensive industries (e.g. utilities may require a very high threshold) to qualify.
According to NIPC, companies both existing beneficiaries of PSI and new investors are advised to engage with the Commission for a smooth transition under the new framework.
Businesses planning to apply for tax-free status under the old PSI must have submitted their applications by November 10, 2025 no new submissions will be accepted.
For new businesses or expansions, the new incentive is no longer a full tax holiday but a tax credit tied to invested capital, so returns depend on actual investment scale and deployment.
The shift suggests a policy move by the government to encourage real capital investment and long-term projects, rather than incentivizing businesses just with tax-free status.
It may also mean that smaller ventures or low-capital activities might benefit less compared with large capital-intensive projects, depending on the minimum thresholds under EDTI.
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