The Federal Inland Revenue Service (FIRS) has announced plans to give Dangote and other private companies in Nigeria access to 50% of expenditure in tax credit.
Speaking at a recent forum in Abuja, FIRS executive chairman, Babatunde Fowler, disclosed that the plan was to solve infrastructural deficit in the country by reducing the actual amount of tax to be paid by private companies, while these companies also share the cost of infrastructural projects with the Government.
He stated that more than 10 local companies had applied for the scheme to receive 50% of expenditure in tax credits. He said the plan was to make sure that those companies get 50% of expenditure in tax credit
Throwing more light on the likely biggest benefactors from this arrangement, Fowler stated that only two companies have benefitted from the partnership of receiving tax credits for infrastructure projects thus far, mentioning Dangote Group and another anonymous company and alluding that the arrangement may reduce the amounts he collects.
“It may reduce the amount of my collections initially, but … as I expand my tax net, I would make up for that reduction, we believe we would generate more revenues from the additional infrastructure that would be created,” he stated.
“There are a lot of areas that are not yet captured, I believe that Nigeria should review the VAT rate to 7.5%,” he said, though any such change would have to be implemented by the government.”
Recall that the tax credit scheme was signed into law under an executive order, by President Muhammadu Buhari in January this year and with this arrangement, companies who agree to share the cost of infrastructural projects with the Government will not have to worry about paying 50% of cost incurred on road construction and related public goods.