The EDI replaces the old PSI and works differently.
- EDI: Provides a 5% annual tax credit on qualifying capital expenditure. This is a credit, not a full exemption.
- PSI: Was a full tax holiday, meaning no tax was paid at all.
The key difference is that under EDI, a company must first pay its taxes and then claim the credit. Under PSI, the company was simply exempt from payment.
- Scenario: A company building a solar panel factory spends ₦1 billion on equipment. It can claim an EDI tax credit of ₦50 million per year.
