The Federal Inland Revenue Service (FIRS) issued tax credit to the tune of N147.8 billion in 2021, to some private investors and the NNPC.
This was disclosed by Tolu Ogunlesi, the special assistant to President Muhammadu Buhari on Digital and New media on his verified Twitter handle.
Mr Ogunlesi said in 2021, FIRS issued N147.8 billion in tax credit to private investors and NNPC under Executive Order 007.
What Mr Ogunlesi is saying about the tax credit
Ogunlesi tweeted, “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.”
He said the tax credit is the compensation for monies spent by the participating companies in fixing 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,” Mr Ogunlesi tweeted.
He listed the names of some companies and what they have done under the tax credit and also those who had shown interest to participate.
What you should know about tax credit
- On January 25, 2019, President Muhammadu Buhari signed the Executive order 007.
- The Executive order 007, Established the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme 2019. The scheme seeks to encourage public-private partnership interventions.
- The scheme is a ten-year scheme that enables the federal government to leverage on private sector funding for the construction of Refurbishment of eligible road infrastructure projects in Nigeria.
- Tax credit scheme Is a way of paying tax. It means instead of paying the government money, the companies undertake to do a project on behalf of the government that is worth the amount of money they should have paid earlier as tax.
- The private participants of the Scheme, provide the funds for the construction/refurbishment projects and in exchange, they are entitled to regain the funds they provided as a credit against the companies income tax they should have paid.
- Sometimes, The companies propose to do the projects and sometimes it is the government that calls for companies to access its tax credit scheme. So in the long run, they use the money they ordinarily would have paid to the government as tax to do the projects.
- Entities that can participate in the sachet 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 and investment banks and companies operating through a special purpose vehicle (SPV) registered by a fund manager duly registered with the Securities and Exchange Commission (SEC) and set up solely as an infrastructure fund.
- The tax credit scheme is a government policy usually issued by the ministry of finance that helps private investors recover their full construction costs as tax credits, over a period.
- It was introduced by the federal government to help fund the Government’s infrastructure development initiative where the private sector participates in the provision and maintenance of key infrastructures across the country.
- The minister of finance recommends the eligible roads to be constructed to the President for his approval and the roads are to be published in the Federal Government’s Official Gazette.