Harnessing Nigerian Government Tax Incentives for Road Construction


The Road Infrastructure Development and Renewal Investment Tax Credit Program (the Program) is a form of tax incentive granted to Nigerian businesses (other than a sole proprietorship) that engage in construction and the renovation of roads designated by the Federal Government of Nigeria as “eligible.” “

The regime entered into force on January 25, 2019, when Nigerian President Muhammadu Buhari signed Presidential Decree No. 007. The regime is for a period of 10 years, from the date of entry into force of the decree ( i.e. 2019).

The main objectives of the program are to encourage and promote private sector financing for construction or repair of eligible road infrastructure projects in Nigeria, to place more emphasis on the development of eligible road infrastructure projects in Nigeria. ‘a way that will generate good value for money through the private sector. sector, and guarantee participants the full and timely recovery of funds allocated for the construction or repair of eligible road infrastructure projects in the manner prescribed in the decree.

Applicants (i.e. companies) who intend to participate in the program are required to register and be certified by the Investment Tax Credit Program Management Committee for the development and renovation of road infrastructure (the Committee). The recommendation of the applicant’s eligibility to participate is determined by the committee, where it confirms that the project proposed by the applicant is economically viable, profitable and can be completed in a timely manner (within 12-48 months).

Road Infrastructure Tax Credit (CIR)

Participants such as Nigerian companies acting alone or in collaboration with other Nigerian companies and institutional investors have the right to use the cost of the project incurred in the construction or renovation of an eligible road as a tax credit against their business income tax (IS), until full cost recovery is achieved. Essentially, this credit does not expire.

In addition, participants are also entitled to a single hike equal to the prevailing monetary policy rate of the Central Bank of Nigeria plus 2% of the project cost. The increase will not constitute taxable income in the hands of the member or beneficiary; however, companies can use the mark-up as a corporate tax credit payable. In this regard, a beneficiary is a business designated by the participant or any person who has purchased or otherwise acquired the right to use all or part of the ITCs initially issued to the participant.

Use of the RITC is conditional upon receipt of the Federal Inland Revenue Service Highway Infrastructure Tax Credit Certificate. In this regard, the amount of ITC that can be used during a valuation year is limited to 50% of the CIT payable by the participant or beneficiary. However, RITCs issued under eligible roads in economically disadvantaged areas can be fully utilized in an assessment year without any form of restriction.

It should also be noted that the Scheme allows holders of the RITC certificate to register as well as trade the RITC on a relevant stock exchange. Participants are also permitted to transfer all or part of their certificate to willing buyers on a relevant stock exchange. However, this trade should be brought to the attention of the Committee. The committee has the power to deregister the participant who sold their ITC and to register the new beneficiary.

Exploit the benefits offered by the program by Nigerian companies

Normally, donations made by companies to organizations certified in Nigeria in accordance with the relevant provisions of the Corporate Income Tax Act are permitted for tax purposes as long as they comply with the relevant provisions. However, when a business makes donations to organizations that are not approved by the Corporate Income Tax Act, the donations are often refused for tax purposes.

Given the tax incentive offered by the program, a Nigerian company can mitigate the impact of ineligible donations by registering with the committee in order to be eligible to carry out road development and renovation projects on designated routes in Nigeria. In this regard, the company, on presentation of the RITC certificate, would be authorized to claim both the cost of the project and the mark-up as a tax credit on corporate tax payable.

Engaging in such projects will strengthen the brand image of the participating company, especially in economically disadvantaged areas, and possibly reduce or eliminate the CIT payable in a tax year in which the company has an unused tax credit.

Companies wishing to participate in the program are advised to conduct a solid analysis of the financial model to enable them to make an informed decision.


In view of the above, the participation should be beneficial for the companies participating in the scheme, as the tax credit should lead to a reduction or elimination of the CIT payable, in particular when the eligible road projects are carried out in economically disadvantaged areas.

In addition, the program provides for the sale of RITC to willing buyers on a relevant stock exchange. In this regard, companies registered with the Nigerian Securities Exchange Commission should be in a better position to benefit from the incentives offered by the program, as they have the opportunity to sell RITC to interested buyers.

This column does not necessarily reflect the opinion of the Bureau of National Affairs, Inc. or its owners.

Temitope Samagbeyi is Global Compliance and Reporting Tax Partner with EY, Nigeria.

The author can be contacted at the following address: [email protected]


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