By Omodele Adigun
The President of the Chartered Institute of Taxation of Nigeria (CITN),Mr Adesina Adedayo, has commended the approval given by the Federal Executive Council (FEC) to the Nigerian National Petroleum Corporation (NNPC) for the construction/refurbishment of 21 roads under the Road Infrastructure Tax Credit Scheme. This development accords with the purpose of Executive Order 007 tagged ‘Road Infrastructure Development & Refurbishment Investment Tax Credit Scheme (RID&RITCS)’ signed by President Muhammadu Buhari on January 25, 2019.
The Executive Order seeks to encourage Public-Private Partnership in the construction/refurbishment of road infrastructure in Nigeria. 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 in a statement noted that the Memorandum of Understanding (MOU) between the Federal Government 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 2 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.
Also, a participant can sell or transfer its tax credit to other companies, as a form of security or otherwise.