The Chairman, Federal Inland Revenue Service, Zaccheus Adedeji, has expressed reservation over the three-year-old N2.59 trillion Tax Credit Scheme introduced by former President Muhammadu Buhari’s administration for road construction across Nigeria.
The FIRS boss expressed the reservation at an interactive session in the Federal Capital Territory, Abuja on Thursday.
The meeting was at the instance of the Senate Committee on Finance, with the FIRS management and NNPLC Management.
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The News Agency of Nigeria reports that the N2.59 trillion Tax Credit Scheme was introduced via Executive Order 7 of 2021 by the Buhari-led administration.
The Committee, led by the Chairman, Senator Sani Musa, had invited the management of the FIRS and NNPLC to brief it on the implementation of the scheme in relation to the poor state of federal roads across the country.
Adedeji said the scheme was unlawful and should be discontinued .
He said: “The mandate of FIRS lumped with execution of Tax Credit Scheme for road construction is to access, collect tax and remit it into the Federation Account and not to appropriate it for any purpose through executive order.
“It is not the duty of the FIRS and NNPCL to be paying contractors.
“The Ministry of Works should be in line with its core mandate and allowed to award road contracts and pay for them.
“As a way of stopping the wrong approach, FIRS and CBN (Central Bank of Nigeria) are holding a meeting with the Ministry of Works on Friday, February 17, where stock would be taken of what has been done through the scheme and thereafter toe the right path.
“We should in a nutshell not continue on the wrong trajectory.”
The NNPLC Chief Financial Officer, Umoru Ajiya, clarified on the $3.3 billion loan facility secured for the Central Bank of Nigeria for the stabilisation of the naira in the foreign exchange market.
He said that it was secured to support CBN to suppress forex volatility.
Ajiya however, told the committee members that the tax credit scheme was helping to fix the dilapidated roads across the six geopolitical zones in the country with N664 billion spent so far.
He said $2.2 billion had already been secured for the apex bank, while the balance of $1.05 billion would be credited to the apex bank before the end of the month.
Musa said relevant provisions of the 1999 constitution (as amended) were against the scheme because the fund that NNPCL and FIRS were being made to spend on the roads through tax credit was supposed to be remitted into a consolidated revenue fund.
“We are waiting for the outcome of the meeting of the three agencies involved in the scheme before deciding on how to help the present government to correct mistakes of the past,” he said.
NAN reports that the Road Infrastructure Tax Credit, which can be claimed in any year of assessment, is limited to 50 percent of the annual CIT liability.
There is however no limit to the tax credit which can be claimed in respect of an Eligible Road in an Economically Disadvantaged Area.