Leveraging Fiscal Incentives to Foster Mass Transit Adoption: Insights from Nigeria’s Finance Act 2021.


The Nigerian economy is in a continuous state of evolution, with rapid urbanization and population growth presenting both opportunities and challenges. One of the most pressing challenges is the issue of traffic congestion and its associated economic and environmental ramifications. To address this concern and promote sustainable development, Nigeria’s Finance Act of 2021 has introduced a range of fiscal incentives aimed at encouraging mass transit usage among Nigerian businesses. In this article, we will delve into the key provisions of the Finance Act and explore how businesses can leverage these incentives to drive positive change.

The Imperative for Mass Transit Adoption:

Urban centers in Nigeria, particularly major cities like Lagos, Abuja, and Port Harcourt, grapple with severe traffic congestion, resulting in significant economic losses, increased fuel consumption, and elevated carbon emissions. Mass transit systems present a viable solution to alleviate these issues by reducing the number of individual vehicles on the road, lowering travel times, and curbing pollution. Recognizing the potential of mass transit to transform urban mobility, the Nigerian government has taken proactive measures through the Finance Act 2021 to incentivize businesses to embrace this mode of transportation.

Fiscal Incentives for Mass Transit Usage:

  • Tax Deductibility of Mass Transit Costs: Under the Finance Act 2021, expenses incurred by businesses for providing mass transit services to their employees are now tax-deductible. This provision serves as a powerful incentive for businesses to establish and maintain efficient transportation systems, such as shuttle buses or employee carpool programs. By reducing the tax burden, the government is encouraging more businesses to invest in mass transit options.
  • Investment Tax Credit: The Finance Act introduces an investment tax credit for companies that invest in the development and maintenance of mass transit infrastructure. This credit allows businesses to offset a portion of their tax liability based on the value of their investment, thereby promoting the expansion and enhancement of mass transit networks.
  • Import Duty Waivers: Import duties and tariffs on vehicles used for mass transit purposes have been significantly reduced or waived altogether. This measure aims to make the acquisition of vehicles for public transportation more affordable, enabling mass transit operators to modernize their fleets and improve service quality.
  • Accelerated Capital Allowances: The Act also provides for accelerated capital allowances for businesses that invest in environmentally friendly and energy-efficient mass transit technologies. This encourages the adoption of eco-friendly vehicles and technologies, reducing both operational costs and environmental impact.
  • Public-Private Partnerships (PPPs): The Finance Act encourages public-private partnerships in the development and operation of mass transit systems. Businesses entering into PPPs with government agencies can benefit from tax incentives and revenue-sharing models, fostering collaboration in addressing the transportation challenges.

Maximizing the Benefits:

To fully capitalize on the fiscal incentives provided by the Finance Act 2021, Nigerian businesses should consider the following steps:

  • Holistic Planning: Businesses should assess their current transportation needs and explore opportunities for implementing or enhancing mass transit solutions. This could include setting up employee shuttle services, partnering with existing transit providers, or investing in fleet upgrades.
  • Tax Planning: Engaging with tax experts and accounting professionals is crucial to understanding the intricacies of the fiscal incentives and optimizing their utilization. Businesses can structure their investments and expenditures in a way that maximizes tax benefits.
  • Sustainability Focus: Given the emphasis on eco-friendly transit options, businesses should prioritize the adoption of energy-efficient vehicles and technologies. This not only aligns with the government’s environmental goals but also qualifies them for additional tax advantages.
  • Collaborative Partnerships: Exploring opportunities for PPPs can yield mutual benefits for both businesses and government entities. By participating in joint ventures, companies can leverage shared resources and expertise to create efficient and effective mass transit systems.


Nigeria’s Finance Act 2021 has ushered in a new era of fiscal incentives designed to stimulate mass transit adoption among Nigerian businesses. By embracing these incentives and taking proactive steps to integrate mass transit solutions, businesses can contribute to alleviating traffic congestion, reducing carbon emissions, and fostering sustainable economic growth. As the nation moves forward, leveraging these incentives will not only enhance the efficiency of business operations but also play a pivotal role in shaping a more sustainable and prosperous future for Nigeria.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.