CITN lauds FG on implementation of road infrastructure investment tax credit scheme

The Chartered Institute of Taxation of Nigeria (CITN) has lauded the Federal Government for giving approval to the Nigerian National Petroleum Corporation (NNPC) for the construction/refurbishment of 21 roads under the Road Infrastructure Tax Credit Scheme.

In a statement on Monday in Lagos, Mr Adefisayo Awogbade, Registrar of the Institute, said the development accords with the purpose of Executive Order 007 tagged ‘Road Infrastructure Development & Refurbishment Investment Tax Credit Scheme (RID & RITCS).

The scheme was signed by President Muhammadu Buhari on January 25, 2019.

Awogbade said the Executive Order seeks to encourage Public-Private Partnership in the construction/refurbishment of road infrastructure in Nigeria.

He explained that 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.

“CITN 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.

“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 2% 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,” he said.

He recalled that 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.

He said 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.

He regrets that 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.

“On behalf of the Council and members of the CITN, we express our unreserved appreciation to the Federal Ministry of Finance, Budget and National Planning, the Federal Ministry of Works, NNPC, the Federal Inland Revenue Service, and other stakeholders of the Road Infrastructure Tax Credit Scheme.

“For demonstrating to citizens that taxpayers’ money can do a lot for national infrastructure development, when well deployed,” he said

He listed 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),

Others were 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,” he said.

The Institute, therefore, encourage the parties involved in the implementation of the project to keep to the terms and conditions associated with the MoUs.