The President and Council of the Chartered Institute of Taxation of Nigeria (CITN) has lauded the Federal Executive Council (FEC) for approving the Nigerian National Petroleum Corporation (NNPC) for the construction/refurbishment of 21 roads under the Road Infrastructure Tax Credit Scheme.
In a statement, the CITN Registrar/Chief Executive, Adefisayo Awogbade, said the step aligns with the Executive Order 007 tagged ‘Road Infrastructure Development & Refurbishment Investment Tax Credit Scheme (RID&RITCS)’ signed by President Muhammadu Buhari in January last year.
The Executive Order seeks to encourage Public-Private Partnership in the construction/refurbishment of road infrastructure in Nigeria.
CITN said the credit to be issued in the scheme has legal basis in section 23(2) of the Companies Income Tax Act (CITA), which grants the President the power to exempt any company or class of companies from all or any of the provisions of CITA or exempt all or any profits of any company or class of companies from tax, on any ground the President deems sufficient.
CITN has noted with great pleasure the Memorandum of Understanding (MOU) between the Federal Government of Nigeria and Dangote Cement PLC, for the rehabilitation of Obajana – Kabba Road by A.G. Dangote Construction Company Limited, a member of the Dangote Group.
The Order requires private sector participants to provide funding for a road project and recover the full project cost for the construction or refurbishment of eligible roads plus an uplift set at prevailing CBN Monetary Policy Rate plus two per cent of the total project cost (including professional services cost).
“The uplift is not taxable in the hands of the participants. The claim of tax credit by the participating taxpayers is through an offset from their annual Companies Income Tax payable to the Federal Government through the Federal Inland Revenue Service. The tax credit may be carried forward to subsequent years until it is fully utilised,” it said
Also, a participant can sell or transfer its tax credit to other companies, as a form of security or otherwise.
In retrospect, in January 2020, the Federal Government of Nigeria awarded 19 road projects measuring 800 kilometres in 11 States across the six geo-political zones based on its Investment Tax Credit Scheme. The road projects were allocated to ten (10) indigenous companies that applied to join Dangote group and Nigeria Liquefied Natural Gas (NLNG), who pioneered the private sector investment in road infrastructure.
Some of the eligible roads under the Scheme scheduled for substantial completion in 2020/2021 include dualization of Suleja-Minna Road (Niger), Ilorin-Jebba-Mokwa/Bokani Road (Kwara), Nnewi-Oduma-Mpu-Uburu (Enugu/Ebonyi), Yenagoa-Okaki-Kolo-Nembe-Brass Road (Bayelsa/Rivers), Bodo-Bonny Road with a bridge across the Opobo Channel (Rivers/Akwa Ibom), the rehabilitation and expansion of Lagos-Badagry Expressway and Lagos-Ibadan Expressway (Lagos/Ogun/Oyo).
As of August 2021, NLNG and Dangote Cement Plc have received tax credit certificates valued at N46 billion and N32 billion, respectively between 2019 and 2021 to offset their income tax payable for the applicable years.
Other taxpayers that have indicated interest in the investment tax credit scheme include but not limited to: Unilever, Julius Berger, MTN, BUA Group of Companies, Access Bank, Transcorp, Lafarge and GZI Industries.
“Whereas it is the responsibility of the Federal Government to engage in the construction of roads for easy movement of goods and services for the economic growth and development of Nigeria, the current financial burden of the government has left so many important roads in a bad shape thereby hampering several economic activities. To address this, the FG in July 2021 awarded additional five (5) road projects worth N309.9 billion with a combined total length of 274.9 kilometres of Federal Roads to Dangote Group under the tax credit scheme. The private-public participation under the Scheme is an innovation that has greatly helped to bridge the gap in road infrastructure in Nigeria,” the CITN said.
The Federal Government intervention under the Scheme, if properly implemented, will douse the tension generated by the October 2021 strike threat by the National Union of Petroleum and Natural Gas Workers (NUPENG), Petroleum Tanker Drivers wing, due to the deplorable state of the designated roads, which have caused many accidents involving petroleum tankers.
“They demanded for the immediate repairs of these roads as the avenue to avert the suspended nationwide strike. The undertaken by the NNPC to construct/refurbish twenty-one (21) roads under the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme is a laudable step as it is obvious that the Federal Government, through the Ministry of Works, has no budget proposal to rehabilitate these affected roads. Thus, the FEC approval of NNPC’s application to construct the roads is a welcome development, which the CITN considers commendable,” the statement said.
 has lauded the Federal Executive Council (FEC) for approv){kind=link}