The Road Infrastructure Development and Rehabilitation Investment Tax Credit Scheme (the Scheme) is a form of tax incentive given to Nigerian companies (other than a sole proprietorship) that engage in the construction and the upgrading of roads designated by the Federal Government of Nigeria as “eligible”. .”

The program came into effect on January 25, 2019, when Nigerian President Muhammadu Buhari signed Presidential Executive Order No. 007. The program is for 10 years from the effective date of the Executive Order ( i.e. 2019).

The main objectives of the program are to induce and promote private sector financing for the construction or repair of qualifying road infrastructure projects in Nigeria, to place greater emphasis on the development of qualifying road infrastructure projects in in a manner that will generate good value for money through the private sector, and ensure participants full and timely recovery of funds provided for the construction or repair of eligible road infrastructure projects in the manner prescribed in the Executive Decree.

Applicants (i.e. companies) wishing to participate in the program must register and be certified by the Management Committee of the Road Infrastructure Development and Renovation Investment Tax Credit Program ( the committee). The recommendation of the candidate’s eligibility to participate is determined by the committee, which confirms that the candidate’s proposed project is economically viable, profitable and can be completed in a timely manner (within 12 to 48 months).

Road Infrastructure Tax Credit (RITC)

Participants such as Nigerian companies acting alone or in collaboration with other Nigerian companies and institutional investors are entitled to use the project cost incurred in constructing or upgrading a qualifying road as credit tax on their business income tax (CIT), until full cost recovery. Essentially, this credit does not expire.

In addition, participants are also entitled to a one-time increment 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 participant or the beneficiary; however, businesses can use the mark-up as a tax credit against corporation tax payable. In this regard, a beneficiary is a company designated by the participant or any person who has purchased or otherwise acquired the right to use all or part of the RITC initially issued to the participant.

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

It should also be noted that the program allows RITC certificate holders to register and trade the RITC on an appropriate stock exchange. Participants are also authorized to sell all or part of their certificate to willing buyers on an appropriate stock exchange. However, this trade should be brought to the attention of the Committee. The Committee is authorized to deregister the participant who has sold his RITC and to register the new beneficiary.

Harnessing the benefits offered by the program by Nigerian companies

Usually, donations made by companies to organizations certified in Nigeria under the relevant provisions of the Corporation Income Tax Act are permissible for tax purposes as long as they comply with the relevant provisions. However, when a company makes donations to organizations that are not approved by the Corporate Income Tax Act, the donations are often disallowed for tax purposes.

Given the tax incentive offered by the scheme, a Nigerian company can mitigate the impact of ineligible donations by registering with the Committee to be eligible to carry out road development and rehabilitation projects on designated roads in Nigeria. In this respect, the company, upon presentation of the RITC certificate, would be entitled to claim both the cost of the project and the mark-up as a tax credit against the corporation tax payable.

Engaging in such projects will enhance the image of the participating business, particularly in economically disadvantaged areas, and possibly reduce or eliminate corporate tax payable in a tax year when the company has an unused tax credit.

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


In view of the above, participation is expected to be beneficial for companies participating in the scheme, as the tax credit is expected to result in a reduction or elimination of corporate tax liability, particularly where qualifying road projects are carried out in economically disadvantaged areas.

In addition, the Scheme provides for the sale of RITC to willing buyers on an appropriate stock exchange. In this regard, companies registered with the Nigerian Securities Exchange Commission are expected to be in a better position to benefit from the incentives provided by the program, as they have the opportunity to sell the 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 a Global Compliance and Tax Reporting Partner at EY, Nigeria.

The author can be contacted at: temitope.samagbeyi@ng.ey.

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