THE EXECUTIVE ORDER 007 OF 2019
Imagine that Nigeria is a ship. A sinking ship. Experience has shown that to save a sinking ship, you unburden it by throwing out items. This is the way the Federal Government has been throwing out various schemes to save Nigeria because of the reduced dependence on oil. Most of these schemes e.g. Voluntary Assets and Income Declaration Scheme (VAIDS) and Voluntary Offshore Assets Regularization Scheme (VOARS), are focused on taxation because it is a sustainable means for the government to generate revenue.
A recent scheme of the Federal Government in a bid to use taxation to solve a problem Nigeria is notorious for – terrible roads, is Executive Order 007 also known as the Road Infrastructure Development and Refurbishment Tax Credit Scheme (the Scheme). This Scheme was signed by President Muhammadu Buhari, on the 25th of January, 2019 pursuant to powers conferred on him by Section 5 of the 1999 Constitution of Nigeria as amended.
The aim of this Scheme is for private companies to construct or refurbish 19 eligible roads in Nigeria for a period of ten (10) years. The cost of the project incurred by these companies will be converted to company income tax credits. This means that the companies can subtract the money spent on the project from company’s income tax they are required to pay in future. The companies will also receive an extra 2% of the project cost, tax free.
The Scheme is flexible as it allows carrying forward of the tax credits and allows the companies trade their tax credits on the stock exchange. Thus, We Go Dey Alright Ltd’ who did not participate in the Scheme can buy two million naira (N2,000,000,000) worth of tax credits from Life is Eazi Ltd. who gained five million naira (N5,000,000,000) as Tax credit through the Scheme.
The Scheme allows the Federal Government to kill many birds with one stone as the private sector uses its money to do Government’s work for it while Government gets busy doing other things for the betterment of Nigeria. Also, the bureaucracy and unnecessarily prolonged projects associated with the public sector will be non-existent. It is also reasonably expected that quality materials will be deployed and standard road infrastructure will be produced overall.
There have been concerns about the workability of the Scheme as it is to run for 10 years. It follows that accountability on the part of the participating companies is paramount. It cannot however be denied that the Scheme is one of the best things thrown out by the Federal Government to save Nigeria’s ship and that it is bound to work as long as there is proper record keeping and accountability between the Government and the participating companies.
Ololade Anifowoshe is a 400-level student of the Faculty of Law, University of Lagos. She currently works in the Operations team of TaxVille. Her personality earned her Personality of the year, Faculty of Law, University of Lagos, in the 2016/2017 session. A goal driven individual, with a dedication to putting others first, she currently serves as the Welfare Officer of the Tax Club, Unilag. Her interests include: Tax, ADR and Debt Recovery.