Firms get N147.8b tax credit to invest, fix roads
By Jeph Ajobaju, Chief Copy Editor
Private firms – among them Dangote, Glo, and MTN – as well as the Nigerian National Petroleum Company (NNPC) received N147.8 billion tax credit in 2021 to encourage them to invest in the economy, build federal infrastructure plus 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 a lot here about Exec Order 7, under which @NigeriaGov issues tax credits to companies pre-approved to invest in building/fixing federal roads.
“In 2021 @firsNigeria issued a total of N147.8 billion in tax credit to private investors & @NNPCgroup under this EO7,” Ogunlesi disclosed on his Twitter handle.
He said tax credit is compensation for investment in federal infrastructure and roads.
“Company seeks & receives FGN approval to spend its own money fixing a road. FGN repays the company through tax credits issued over a number of years.
Ogunlesi listed Dangote, Glo, MTN, NNPC, and other firms and what they have done under the tax credit scheme as well as others who have shown interest in it.
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About tax credit
Buhari on 25 January 2019 signed Executive Order 007 which Established the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme 2019.
The scheme lasts10 years and encourages public-private partnership interventions.
Nairametrics explains that tax credit means instead of paying tax to the treasury, a company undertakes to do a project on behalf of the government that is worth the amount of money it should have paid as tax.
Participants in the scheme provide funds to construct new and or refurbish existing projects as a credit against income tax payable.
Companies may propose to do the projects or the government may call them to access its tax credit scheme. They use the money they ordinarily would have paid to the government as tax to do the projects.
Entities that can participate in the scheme include
- A company or corporation, other than a sole corporation established under the Companies and Allied 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) solely as an infrastructure fund.
A tax credit is usually issued by the Ministry of Finance to help private investors recover their full construction costs as tax credits.
The minister of finance recommends such projects to the President for his approval and they are published in the Official Gazette.