- FG Gives Dangote, Others Tax Credits to Boost Infrastructure
In a bid to boost the nation’s infrastructure, the Federal Government through the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme have started granting private companies tax credits in exchange for road construction.
Mr Tunde Fowler, Executive Chairman of the Federal Inland Revenue Service (FIRS), disclosed this in an interview held on Wednesday, September 5.
According to him, more than ten companies had applied to receive 50 percent of expenditure in tax credits.
He, however, said only two companies had successfully completed the process to receive tax credits for infrastructure projects. One of the two companies was Dangote Group while the tax chairman kept the other anonymous.
Mr Fowler further explained that while this may reduce revenue generation of the agency in the near-term, it would boost growth going forward.
“It may reduce the amount of my collections initially, but … as I expand my tax net, I would make up for that reduction,” said Fowler. “We believe we would generate more revenues from the additional infrastructure that would be created.”
President Muhammadu Buhari signed the tax credit scheme into law under an Executive Order 007 2019.
Buhari, who was elected for a second term in February, promised to increase Nigeria’s economic productivity and diversify the nation far away from the unstable oil market. However, rising debt servicing costs amid unstable global oil market continues to impede that agenda.
In 2016, the nation spent 35 percent of government revenues on debt servicing alone, that amount has now risen as the government continues to ramp up borrowing in the last three years.
Therefore, with limited available resources amid global uncertainty intensified by the ongoing trade war and Brexit, the Buhari administration was forced to establish an alternative means — tax credit scheme – to achieve its economic diversification agenda.