PIA-2021_Fiscal Framework-Part III (Chargeable Tax).pdf

Petroleum Industry Act, 2021 2021 No. 6 (2) In determining the chargeable profit, the total cost shall not exceed the cost-price ratio as determined in the Sixth Schedule to this Act. A 291 Sixth Schedule. (3) The chargeable profits and allowances shall be determined separately for the two class...

Petroleum Industry Act, 2021 2021 No. 6 (2) In determining the chargeable profit, the total cost shall not exceed the cost-price ratio as determined in the Sixth Schedule to this Act. A 291 Sixth Schedule. (3) The chargeable profits and allowances shall be determined separately for the two classes of assessable profits under section 267 (a) and (b) of this Act. PART III—ASCERTAINMENT OF CHARGEABLE TAX 267. The chargeable tax for any accounting period of a company shall be a percentage of the chargeable profit for that period aggregated and it shall be— Chargeable tax. (a) 30% of the profit from crude oil for petroleum mining leases selected under section 93 (6) (b) and (7) (b) of this Act with respect to onshore and shallow water areas ; and (b) 15% of profit from crude oil for onshore and shallow water and for petroleum prospecting licences selected under section 93 (6) (a) and (7) (a) of this Act. 268.—(1) Where, for any accounting period of a company, the amount of the chargeable tax for that period, calculated in accordance with the provisions of this Act other than this section, is less than the amount mentioned in subsection (2), the company is liable to pay an additional amount of chargeable tax for that period equal to the difference between those two amounts. Additional chargeable tax payable in certain circumstances. (2) The amount referred to in subsection (1) is, for any accounting period of a company, the amount which the chargeable tax for crude oil for that period, calculated in accordance with this Act, would come to, in the case of crude oil exported from Nigeria by the company, the reference in section 262 (1) (a) of this Act to the proceeds of sale were a reference to the amount obtained by multiplying the number of barrels of that crude oil determined at the measurement point by the fiscal oil price per barrel. (3) For the purpose of subsection (2), the Commission shall establish the fiscal oil price at each measurement point on an export parity basis under paragraph 8 (1) and (2) of the Seventh Schedule and the total value of the chargeable oil for a company shall be the sum of the multiplications of volume and fiscal oil price at all measurement points as established by the Commission. (4) The whole of any additional chargeable tax for crude oil and associated gas payable by a company by virtue of this section for any accounting period shall be payable concurrently with the final instalment of the chargeable tax payable for that period. Seventh Schedule. A 292 2021 No. 6 Petroleum Industry Act, 2021 (5) Where there is no fiscal oil price established for a crude oil stream, the Commission shall establish fiscal oil price for such stream and every fiscal oil price per barrel established shall bear a fair and reasonable relationship— (a) to the established fiscal oil price of Nigerian crude oil streams of comparable quality and specific gravity ; or (b) where there are no such Nigerian crude oil streams of comparable quality and specific gravity it shall bear a fair and reasonable relationship to the official selling prices at main international trading centers for crude oil of comparable quality and gravity, due regard being had in either case to freight differentials and other relevant factors. (6) Where any crude oil, which in relation to a particular company is its chargeable oil, is exported from Nigeria by another company, that crude oil shall for the purpose of this section be deemed to be exported from Nigeria by that particular company. PART IV—ASCERTAINMENT OF CHARGEABLE PROFITS AND CONSOLIDATION FOR TAX PURPOSES Artificial transactions. 269.—(1) Where the Service is of the opinion that any disposition is not given effect to or that any transaction which reduces or would reduce the amount of any tax payable is artificial or fictitious, the Service may disregard any such disposition or direct that such adjustments shall be made with respect to the companies’ liability to tax as the Service considers appropriate to counteract the reduction of liability to tax effected or reduction which would otherwise be effected, by the transaction and the companies concerned shall be assessed accordingly. (2) In subsection (1), the expression “disposition” includes any trust, grant, covenant, agreement or arrangement. (3) For the purpose of this section, the following transactions shall be deemed to be artificial or fictitious, namely, transactions between persons one of whom has control over the other or between persons both of whom are controlled by some other person which, in the opinion of the Service, were not made on terms which might be expected to have been made by independent persons engaged in the same or similar activities dealing with one another at arm’s length. (4) A company in respect of which any direction is made under this section, shall have a right of appeal in like manner as though for the purpose of Part III of this Chapter such direction was an assessment. (5) Subject to this Act, the provisions of the Income Tax (Transfer Pricing) Regulations 2018 shall apply.