PIA-2021_Fiscal Framework-Part I (Objectives and Administration).pdf

Petroleum Industry Act, 2021 2021 No. 6 A 285 (2) Where in any year, an act of vandalism, sabotage or other civil unrest occurs that causes damage to petroleum and designated facilities or disrupts production activities within the host communities, the community shall forfeit its entitlement to t...

Petroleum Industry Act, 2021 2021 No. 6 A 285 (2) Where in any year, an act of vandalism, sabotage or other civil unrest occurs that causes damage to petroleum and designated facilities or disrupts production activities within the host communities, the community shall forfeit its entitlement to the extent of the costs of repairs of the damage that resulted from the activity with respect to the provisions of this Act within that financial year : Provided the interruption is not caused by technical or natural cause. (3) The basis for computation of the trust fund in any year shall always exclude the cost of repairs of damaged facilities attributable to any act of vandalism, sabotage or other civil unrest. CHAPTER 4 —PETROLEUM INDUSTRY FISCAL FRAMEWORK PART I—OBJECTIVES AND ADMINISTRATION 258.—(1) The objectives of this Chapter are to— Objectives. (a) establish a progressive fiscal framework that encourages investment in the Nigerian petroleum industry, balancing rewards with risk and enhancing revenues to the Federal Government of Nigeria ; (b) provide a forward-looking fiscal framework that is based on core principles of clarity, dynamism and fiscal rules of general application ; (c) establish a fiscal framework that expands the revenue base of the Federal Government, while ensuring a fair return for investors ; (d) simplify the administration of petroleum tax ; and (e) promote equity and transparency in the petroleum industry fiscal regime. (2) All money collected from the petroleum industry that are due to the Government shall be transferred to the Federation Account in a timely manner, subject to this Act and these payments shall include taxes, royalties, production shares, profit shares, signature bonuses, production bonuses, renewal bonuses, rents, fees, fines, and other levies due in relation to the grant, assignment, termination, and breach of licences, leases and permits. 259. From the commencement of this Act, the administration and Administration. collection of Government revenue in the petroleum industry shall be the function of the Federal Inland Revenue Service (the Service) and the Commission, and— (a) the Service shall be responsible for the assessment and collection of— (i) hydrocarbon tax and enforcement of the provisions of this Act as it relates to hydrocarbon tax assessment and revenue collection, and A 286 2021 No. 6 Petroleum Industry Act, 2021 (ii) companies income tax and tertiary education tax in accordance with this Act as it relates to taxable petroleum operations ; (b) the Commission shall be responsible for the determination and collection of — (i) royalties, signature bonus, rents, and related payments and its enforcement under this Act, and (ii) related payments or production shares, where the model contract includes provisions related to production sharing, profit sharing or risk service provisions ; and (c) the Authority shall be responsible for the determination and collection of the gas flare penalty arising from midstream operations and its enforcement under this Act. PART II—HYDROCARBON TAX Application of this Part. 260.—(1) This part applies to companies engaged in upstream petroleum operations in the onshore, shallow water and deep offshore, provided that— (a) hydrocarbon tax shall apply to crude oil as well as field condensates and liquid natural gas liquids derived from associated gas and produced in the field upstream of the measurement points ; and (b) hydrocarbon tax under this Part shall not apply to— (i) associated natural gas, including gaseous natural gas liquids produced in the field and contained in the rich gas, and non-associated natural gas, (ii) condensates and natural gas liquids produced from non-associated gas in fields or gas processing plants, provided the related volumes are determined at the measurement points or at the exit of the gas processing plant, regardless of whether the condensates or natural gas liquids are subsequently commingled with crude oil, and (iii) any condensates and natural gas liquids produced from associated gas at gas processing or other facilities downstream of the measurement points. Cap. C21, LFN, 2004. (2) The costs of production of associated gas, upstream of the measurement point shall be allocated to crude oil for the purposes of calculating hydrocarbon tax, provided that capital and operating costs for wells solely producing associated gas-cap gas shall not be allocated to crude oil, but shall be claimed under the Companies Income Tax Act. (3) This Part shall not apply to a frontier acreage until it is reclassified under section 68 (3) of this Act and to deep offshore.