The Road Infrastructure Tax Credit Scheme is a game-changer in building competitive infrastructure and resolving the nation’s infrastructure deficit, says the Executive Chairman, Federal Inland Revenue Service (FIRS), Muhammad Nami.
He said the scheme provides for public-private partnership intervention in the construction, refurbishment and maintenance of critical road infrastructure.
It offers participants tax credits against their future company’s income tax with its main focus designed to improve road infrastructure across the country.
He spoke on the sidelines while addressing the Senate Committee on Finance a few days ago.
He said the challenge of road construction in Nigeria had been funding. He argued that though successive administrations awarded contracts for road construction funding these constructions had remained a challenge.
Hailing the Executive Order 007, signed into law in 2019, he said it made it possible for FIRS and NNPC, through its subsidiary, to invest in about 1,824kilo metres of roads across the six geopolitical zones.
“Some of these roads had been constructed as far back as 1976. I could remember when I was still rounding up my primary school education, the road that leads Suleja to Lapai-Agaie-Bida was constructed by a company called DTV. I am not aware of any significant work done on that road 40 years later, only until now when the NNPC is using Executive Order 007 to reconstruct the road.
He said: “The road from Suleja to Minna, for instance, was awarded some 11 years ago to a company for over N20 billion.
“Ironically, annual budgetary provision in our National Budget every year stands between N150 million to N200 million per annum. If we are to complete that road, going by the annual budgetary provisions it would take an average of 35 to 40 years before we finish it.”
“I can confirm to the Chairman that with Executive Order 007, NNPC is now providing funds and in the next two to three years that road will be completed. This is an important innovation of the government and should be encouraged by all”.
Supporting the position of the FIRS Executive Chairman, the minister of finance, budget and national planning, Zainab Shamsuna Ahmed, explained further that the tax credit was only provided to the beneficiaries after completion of the construction work, and not before.
She noted that several companies had indicated interest in carrying out construction and rehabilitation of roads under the scheme across the country, adding that while some of these companies had commenced work, others were yet to as they were still finalising on some of the documentation requirements such as Bill of Quantities.
On the issue of revenue challenges being faced by the country, Muhammad Nami noted that a major cause of tax revenue losses for the country is the issue of having “fragmented tax systems and agencies.”
“In Nigeria we have 774 Local Governments, each of them has a tax authority; each of the 36 States, too, has revenue authorities with their respective mandates; then we have the FIRS and Customs. What I would advise for efficiency and to do things in line with global best practices, is that we should amend our tax laws to harmonise the tax agencies and tax system.
“With this, when the FIRS, for instance visits ‘Company A,’ it can serve one assessment on the company, and also on the individual that owns the company; it can also ask the company to account for the VAT it has collected, and ask for PAYE it has deducted from its employees as well as the Personal Income Tax of the Promoters of the Company.
“This is currently not the case, and as such has created a huge gap in our tax system,” he said.
The Senate Finance Committee charged the federal government through the ministry of finance and members of the government’s economic team to explore novel strategies that would shore up revenue for the federal government, including restructuring the remitting formula for Government Owned Enterprises, (GOEs).
The committee urged the federal government to consider a situation where Government Owned Enterprises, (GOEs), remit 100 per cent of their revenue to the government, while being funded by a determined percentage of Cost of Collection as is the case with the FIRS and Customs.
