The Nigerian National Petroleum Company Limited has deducted $262.55 million from its remittances to the Federal Inland Revenue Service under the Road Infrastructure Tax Credit Scheme.
This information was revealed in a report from the FAAC Post-Mortem Sub-Committee (PMSC) meeting held in August 2024, according to Nairametrics.
The report details that NNPCL deducted $52.51 million monthly from the amounts due to FIRS for Joint Venture Gas and Company Income Tax between February and June 2024.
These deductions are designated for RITCS which allows private companies to invest in essential road infrastructure and offset their tax liabilities.
The report read “Members may recall that the Sub-Committee reported that NNPCL had made deductions in respect of the Road Infrastructure Tax Credit Scheme from the amount due to FIRS JV Gas and CIT taxes. So far, a calendarized sum of $52,509,484.28 was deducted each for the months of February to June 2024 totalling $262,547,421.40.”
Meanwhile, at the meeting, state representatives expressed concerns, arguing that road construction is a federal responsibility.
They insisted that their share of the $262.55 million deduction should be calculated according to the existing Revenue Allocation Sharing Formulae and refunded accordingly.
However, NNPCL representatives clarified that the deductions were preliminary estimates and that a reconciliation process would take place at the end of the year to determine the exact amount due.
To address these concerns, the Chairman of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) formally requested detailed information from the FIRS on the tax credits granted to NNPCL and other organizations involved in the scheme.
The report noted: “The Sub-National position was that it is the responsibility of the Federal Government to construct roads; hence, the share of the Sub-National from the $262,547,421.40 deducted should be computed based on the existing Revenue Allocation Sharing Formulae and refunded to them.
“However, the NNPCL representative explained that the deductions for the Road Infrastructure Tax Credit Scheme are estimates and that there will be a reconciliation with FIRS at the end of the year to ascertain the actual amount due.
“In order to resolve the issue, the Chairman of the Commission wrote to the Management of FIRS requesting the detailed Tax Credit granted to NNPC Ltd and other organizations. The Sub-Committee awaits FIRS’s response.”
The Road Infrastructure Tax Credit Scheme (RITCS) allows companies with significant tax liabilities to construct roads under a negotiated agreement with the federal government, providing infrastructure in lieu of paying taxes.
Last year, the Nigerian Government approved N1.535 trillion under Phase 2 of the NNPCL tax credit scheme.
