@Joe to do as instructed.
Nigeria signs Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme
Executive Summary
Nigeria’s President Muhammadu Buhari signed, on 25 January 2019, the Executive Order No. 007 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme (the Scheme). The Scheme is for a period of 10 years from its commencement date (remains to be clarified).
The Scheme is a public-private partnership (PPP) intervention that enables the Nigerian Government to leverage private sector capital and efficiency for the construction, repair, and maintenance of critical road infrastructure in key economic areas in Nigeria.
It is open to any Nigerian company (other than sole corporations), acting on its own or in collaboration with other Nigerian companies, and institutional investors (hereafter referred to as “Participants”) wishing to construct or repair any road identified and designated by the Government as an “eligible road”1 under the Scheme.
Participants will be entitled to utilize the total cost (Project Cost), incurred in the construction or refurbishment of an eligible road as a tax credit against their future Companies Income Tax (CIT) liability, until full cost recovery is achieved.
As a further incentive, Participants will be granted a single non-taxable uplift. The Uplift will be a percentage of the Project Cost, and the percentage to be applied is Monetary Policy Rate plus 2% on Project Cost. The uplift will be included in the total tax credit available to each participant.
Commencement date
The Executive Order, signed on 25 January 2019, did not specifically state the commencement date of the Scheme. It is expected that the commencement date of the Scheme will be clear once the Executive Order is gazetted.
Duration of the Scheme
The Scheme will be in force for a period of 10 years from the date of commencement.
Objective of the Scheme
The Scheme will:
a. Enable the Government to leverage private sector funding for the construction or repair of eligible road infrastructure projects in Nigeria.
b. Increase the focus on the development of eligible road infrastructure projects in a manner that will generate value for money through the PPP intervention.
c. Guarantee Participants timely and full recovery of funds provided for the construction or repair of eligible road infrastructure projects in the manner prescribed in the Executive Order.
Administration of the Scheme
The Scheme and its activities will be executed by the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme Management Committee (the Committee). The Committee comprises of top cadre personnel of various government ministries and parastatals such as the Federal Inland Revenue Service, Ministry of Power, Works and Housing, Ministry of Finance, Ministry of Industry, Trade and Investment, Ministry of Justice, Nigerian Investment Promotion Commission, Securities and Exchange Commission, Infrastructure Concession Regulatory Commission, National Bureau of Statistics, Nigeria Sovereign Investment Authority and the Bureau of Public Procurement.
Eligibility to participate
The Scheme is open to Nigerian companies (other than sole corporations), institutional investors such as Pension Fund Administrators, Collective Investment Schemes, Insurance Companies, Investment Banks, and a pool of companies operating through a special purpose vehicle set up as an infrastructure fund.
Requirements to benefit
A Private Company must satisfy the following requirements for it to be able to benefit from the Scheme. It must:
a. Register and ensure that its certification by the Committee as a Participant or representative of Participant of the scheme is confirmed.
b. Be designated as a Beneficiary under the Scheme.
c. Provide evidence of certification of the Project Cost by the Committee.
d. Provide evidence that the project is economically viable, cost-efficient and can be completed in a timely manner (within 12 to 48 months).
Definition of Road Infrastructure Tax Credit (RITC)
The Scheme entitles Participants to utilize the Project Cost incurred in the construction or repair of eligible roads as a credit against CIT payable. In doing so, Participants are afforded a single uplift equivalent to the prevailing Central Bank of Nigeria Monetary Policy Rate (MPR) plus 2% of the Project Cost. And where such uplift is granted, it shall not constitute taxable income in the hands of the Participant.
Participants can decide to utilize this RITC from the relevant fiscal year in which the project is incurred until it is fully utilized. However, the amount of RITC that may be utilized in any year of assessment shall be limited to 50% of the company’s income tax payable by the Participant for that year of assessment. Where there is any unutilized tax credit, it shall be available to be carried forward by the Participant to subsequent tax years.
However, as with similar schemes in the past, where a Participant enjoys the benefits of the RITC, it shall not be entitled to claim any other tax credit, capital allowance, relief or incentive on the Project Cost incurred in respect of that eligible road under any law in force in Nigeria.
Scheme’s grant of the RITC
The Federal Inland Revenue Service, through the Committee, will issue the RITC to a participant or its representative, based on the proportion of work done, upon presentation of the following documents:
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An authorization to participate in the Scheme issued by the Committee
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Approval of the Project Cost and completion timeline bid by the Committee
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Contract award letter
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Certification of work done issued by the Committee
Tax credits will be issued to Participants annually based on construction milestones achieved and will become immediately available for use.
The Scheme allows the holders of the RITC certificate to trade it as a financial instrument on a relevant securities exchange and have same registered accordingly. Consequently, Participants are at liberty to undertake disposal of the whole or part of their certificate to willing buyers on a relevant securities exchange in the same manner as they would in the instance of shares, bonds and other securities. However, such trade must be brought to the attention of the Committee, which will then have to de-register the Participant and register the new Participant or in this case, the new beneficiary.
Furthermore, the Executive Order provides that the tax credit may qualify as an asset in a Participant’s or Beneficiary’s financial records and will have to comply with International Financial Reporting Standards.
Implications
The introduction of the Scheme is an innovative plan aimed at sourcing funds to support the Government’s road infrastructure development initiative. However, it is anticipated that the implementation of this Scheme may present challenges, which, unless addressed, could limit the benefits Participants may receive from the Scheme.
Some of the challenges identified include gaps in the Executive Order which might limit the successful execution of the Scheme. The following queries summarize some of such identified gaps:
a. What happens to unutilized RITC after the ten-year duration of the Scheme?
b. What is the impact of the Scheme on roads managed by state and local governments?
c. Are there potential restrictions on claimable tax credits?
d. What are the strategies developed to mitigate bureaucracy and potential administrative bottlenecks?
e. Would the transfer of unutilized RITC as employed in the Scheme be extended to other tax assets such as unutilized withholding tax credits, unrelieved tax losses, or unutilized capital allowances?
The Committee and other stakeholders may need to, through recommendations and proposed amendments to the President, secure clarity around some of the questions posed above.
Nonetheless, the Scheme presents an opportunity for companies, especially manufacturing companies, to channel funds towards the construction and/or repair of eligible roads, including feeder roads and highways, which are most critical to the movement of inventory and products, shortening supply lead times, optimizing the manufacturing supply chain and ultimately enjoying the tax incentive for the cost incurred as specified under the Scheme.
Also of importance is the need for companies with large balance sheets, to avail this opportunity in order to enjoy the various incentives and the reliefs the Scheme provides.
How we can use this/It benefits
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As stated in the document, we can utilize the total cost (Project Cost), incurred in the construction or refurbishment of an eligible road as a tax credit against our future Companies Income Tax (CIT) liability, until full cost recovery is achieved.
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The Scheme allows us, just like other holders of the RITC certificate to trade it as a financial instrument on a relevant securities exchange and have same registered accordingly. As stated also, participants are at liberty to undertake disposal of the whole or part of their certificate to willing buyers on a relevant securities exchange in the same manner as they would in the instance of shares, bonds and other securities.
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Furthermore, the Executive Order provides that the tax credit may qualify as an asset in a Participant’s or Beneficiary’s financial records and to me, this being the case goes a long a way to boost our financial base/liquidity and provide us with many options and ways of holding, maintaining our assets and gives us multiple assets conversion options.
Observation/Comments/Question(s)
Going by the eligibility criteria to participate and as stipulated in the document which state and I quote, ‘’The Scheme is open to Nigerian companies (other than sole corporations), institutional investors such as Pension Fund Administrators, Collective Investment Schemes, Insurance Companies, Investment Banks, and a pool of companies operating through a special purpose vehicle set up as an infrastructure fund’’ .
The question that beg for an answer is, Is Wealth Market eligible, being an NGO limited by guarantee? Does Wealth Market fit into companies/firms/corporations as stipulated above to be eligible? Maybe we need to engage a legal practitioner to interpret and break it down for us, my opinion though.
The Source
The two hyperlinks below it are beautiful.
Did you put them manually or the app somehow automatically did it for you?
Overall an excellent job, Joe. Congrats.
Sir, the app did it for me because i quoted/inserted/made reference to the link/assignment in my time plan as things to work on today.
Thank you sir 
:
Really?
We need to know how that works o.
Study it carefully.
Try samples to the left and to the right.
Document properly if possible with a short training video for reuse.
Thanks sir.
Yes sir. Consider it done sir
Consider it done, but two whole days after, you’ve done nothing. Why? 2020-08-08T21:19:00Z
I’m sorry sir, its not intentional, my internet/data connection has been very erratic. It keep coming and going, bumping out.
This is not acceptable at all.
Find a way to resolve it.
We’re all using the same network.
I’ve made calls from your house many times. And Maggie lived there.
@Joe, I’m still waiting for your response to this.
Ok sir, truth is that I think it’s a network issue, I just realized that other people who stays within my vicinity also experience such,but the irony of it all is that there is a mast, I guess being owed by MTN, 100 meters away from my house, though it is not a regular feature, like once in two months and most times doesn’t last more 2 to 3 hours.
As i said previously, its being done by the system using its internal algorithm and this is how it function:
Once one is on a new post or an old post being created by him or by another person, and made reference to another discourse post(s) by inserting the URL of that post, automatically, a link/hyperlink will be created in the post he is referring to, indicating that the said post has been refereed to in another post by someone. Once one click on that hyperlink in the post it was referred to, it will take that person back to the Post of the person that made reference to the post.
For example, let say Mr ‘‘A’’ is in a discourse post titled '‘ROAD CONSTRUCTION’‘, and in the course of his assignment, he/she made reference to Mr ‘‘B’’ discourse post/article titled '‘PAYMENT SYSTEM’’, by inserting its URL in his post, automatically, a kind of an hyperlink will be created in Mr ‘‘B’s’’ post ‘‘PAYMENT SYSTEM’’, at the foot of the post, indicating the someone quoted/inserted the URL of the article/post (PAYMENT SYSTEM) in his article/post and when such a link is clicked, it will take the person straight to the post it was quoted from.
Note, para-venture, two or more different people quoted the same post, the hyperlinks of such post will show at the bottom/foot of the article.
For example, i quoted/inserted this document title '‘SETTING UP GOOGLE ANALYTICS FOR PRESTASHOP’’ Click the link here At the foot of the article, you will see the hyperlink of this post, indicating i quoted it here in this post and when clicked, will take you back to this post.
@Joe, say this in English.
‘Other people who are staying around my area’
@joe
Create and properly title a new post in the category of how to use Discourse. Cross reference to these items in such a way that all the full benefits of that knowledge are made available at the place people will ordinarily go to acquire knowledge on the subject matter.
other people who stay within my vicinity.