Businesses get N147.8b tax credit to invest and repair roads
By Jeph Ajobaju, Editor-in-Chief
Private companies – including Dangote, Glo and MTN – as well as the Nigerian National Petroleum Company (NNPC) received a N147.8 billion tax credit in 2021 to encourage them to invest in the economy, build federal infrastructure and roads.
The tax incentive was issued by the Federal Inland Revenue Service (FIRS), according to President Muhammadu Buhari’s digital and new media assistant, Tolu Ogunlesi.
“I’ve written extensively here about Exec Order 7, under which @NigeriaGov grants tax credits to pre-approved companies to invest in the construction/repair of federal roads.
“In 2021, @firsNigeria issued a total of N147.8 billion tax credit to private investors and @NNPCgroup under this EO7,” Ogunlesi revealed on his Twitter account.
He said the tax credit is compensation for investments in infrastructure and federal roads.
“The company applies for and receives approval from the FGN to spend its own money to repair a road. The FGN reimburses the company through tax credits given over several years.
Ogunlesi listed Dangote, Glo, MTN, NNPC and other companies and what they have done under the tax credit program as well as others who have shown interest.
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About the tax credit
Buhari signed Executive Order 007 on January 25, 2019 which established the Road Infrastructure Development and Rehabilitation Investment Tax Credit Scheme 2019.
The system lasts 10 years and encourages interventions in public-private partnership.
Nairametry explains that the tax credit means that instead of paying taxes to the treasury, a company agrees to carry out a project on behalf of the government that is worth the amount of money it should have paid as a tax.
Program participants provide funds to build new projects and/or renovate existing projects as a credit against income tax payable.
Companies can offer to carry out the projects or the government can call them to access its tax credit program. They use the money that they would normally have paid to the government as taxes to carry out the projects.
Entities that can participate in the scheme include
- A company or corporation, other than a single company established under the Companies and Related Matters Act 2020 (CAMA)
- Institutional investors such as pension fund administrators
- Collective investment schemes
- Investment banks
- Companies operating through a special purpose vehicle (SPV) registered by a fund manager registered with the Securities and Exchange Commission (SEC) only as an infrastructure fund.
A tax credit is usually issued by the Ministry of Finance to help private investors recoup all of their construction costs in the form of tax credits.
The Minister of Finance recommends these projects to the President for his approval and they are published in the Official Gazette.