EDO STATE GOVERNMENT ISSUES PERSONAL INCOME TAX (INFRASTRUCTURE DEVELOPMENT AND SOCIAL INVESTMENT TAX CREDIT SCHEME) ORDER 2021

The Edo State Governor has signed the Infrastructure Development and Social Investment Tax Credit Scheme Order 2021 (“the Order”). The Order, which was signed on 11 May 2021, introduces the Infrastructure Development and Social Investment Tax Credit Scheme (“the Scheme”), a public-private partnership that enables the Edo State Government to leverage private sector funding in the construction and refurbishment of eligible infrastructure and social projects within Edo State.

Based on the Order, private sector players who invest in eligible infrastructure and social projects shall be entitled to recover investments costs, by way of an Infrastructure and Social Investment Tax Credit Certificate (“ISITCC” or “the Certificate”) issued by the Edo State Government. The value of the ISITCC issued to investors shall be the summation of total investment costs and an uplift equivalent to the Central Bank of Nigeria’s Monetary Policy Rate plus five per cent (5%). The ISITCC shall be a negotiable instrument claimable against Personal Income Tax (PIT) and Withholding Tax (WHT) payable to the Edo State Government.

The Scheme, which will run for five (5) years, will be implemented and administered by the Infrastructure Development and Social Investment Tax Credit Scheme Management Committee (“the Committee”). The Committee will be chaired by the Edo State Commissioner for Finance, and will have as members, the Chairman of Edo State Internal Revenue Service, the Permanent Secretary of the State Ministry of Finance, and representatives of the private sector. One of the responsibilities of the Committee is to recommend for designation, projects eligible under the Scheme.

The idea of offering tax credits to the private sector, in exchange for the performance of specific actions, is not novel. For instance, the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, which offers tax credits in exchange for investment in roads, has been in place since January 2019, whilst the revised Export Expansion Grant Scheme, which offers tax credits in exchange for non-oil exports, has been in place since January 2017. Hence, whilst there is some precedent to glean from, this precedent does not provide adequate insight into the performance of similar schemes at the State level.

Credit: Deloitte Insights

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