OPLs and OMLs). Taxation of Petroleum Profit under the Nigeria’s Petroleum Profit Tax Act Lawal, K. T. 1 ABSTRACT The aim of this paper is to examine the ownership, the legal framework as well as the basic components of the petroleum profits, which components are revenue, adjusted profits, assessable profit, chargeable profit, assessable tax and chargeable tax. It is also governed by Tertiary Education Trust Fund (Establishment, Etc.) Penalty is normally imposed when a taxpayer’s audited accounts and tax computations are submitted late to the Revenue Authority. Found inside – Page 142Assessable Profits : The second head of deductible expenditures as permitted by the PPT Act covers the items listed under Section 14 ( 1 ) of the Act . After the listed deductions have been made from the adjusted profits discussed in ... Their tax affairs are being handled by the FIRS. If however the turnover is higher than N500, 000, the minimum tax payable will be the highest of the above plus 0.125% of the excess of the turnover above N500, 000. Found inside – Page 76The profits as adjusted for tax purposes for the year to 31st December , 1982 was N8,400 . You are required to calculate his assessable income for the first two years of assessment . Solution : 1 St Year of Assessment is 1983 ... If temporary, the assessments should continue to be based on the results of the twelve months ending on the old terminal date; if permanent, the three discretionary years of assessment should be determined to ensure that the tax authority obtains the best terms possible. 1) There shall be levied and paid for each year of assessment in respect of the total profits of every company, tax at the rate of 30 kobo for every Naira. 26; It is interesting to note that the Finance Act also provides the manner of calculating the assessable profits of a maritime company that permanently ceases to carry on a trade or business in Nigeria. Ascertainment of profits, adjusted profit, assessable profits and chargeable profits 6. Found inside – Page 61Effective January 1 , 1993 , every company is expected to pay an education tax calculated at 2 % of its assessable profits every year . This tax is payable within two months of the issue of the assessment notice . Found inside – Page 63If the dividend is paid out of profits which have not yet been taxed , whether or not the recipient is a Nigerian company ... The penalty for late payment of tax is calculated at the rate of 10 % per annum on the tax outstanding 29. 2nd Year – the basis of assessment is the profits of the first twelve months from date of commencement. foreign companies accruing in, derived from, brought into, or received The levy is N20, 000 in the first instance and N25, 000 for any other year, if it still has not commenced business. (c) Protective/jeopardy assessment. Pioneer Companies are usually not assessed to tertiary education tax in view of the income exemption status from tax payment that they enjoy during the pioneer period. For as in Adam all die, so in Christ all will be made alive. 9. What are the Different types of audit? 3.8 Assessment Levied on Dividend Provision where no Tax is Computed or Payable It then later resumed fully into its petroleum operations in 1956, at Oloibiri that is now in Bayelsa state.14 In 1957 the company reduced its acreage to 40,000 square miles of the Oil Prospecting Licenses (OPLs). 5. Taxation emerges largely in our societies. 5.0 Basis for Assessment Taxation emerges largely in our societies. The 85% of assessable profits less 170% of petroleum investment allowance restriction of the Capital Allowance under PPTA is removed under the PIB. assessable profit of that year and the unabsorbed portion, if any, shall be carried forward. Therefore the term “assessment” in it literal sense has a broad meaning. In his book, he categorically stated that “an assessment of tax could be defined as a process whereby the tax officers and tax payer come together and have discussion concerning the general state of the business in order to ascertain what to pay as tax”11 In the same evein, professor Ayua simply defined it as “the process whereby the taxable income of taxpayers is ascertained.”12 Towards the end of 1960, there were about nine petroleum exploring and producing companies holding Nigerian concessions (i.e. 4.0 Requirements for Filing of Tax Returns – Income tax computations, Personal Income Tax (PIT) Analysis: Assessable Income – Is Assessable income equal to adjusted profit or adjusted income or Taxable income? Found inside – Page 85Education Tax Since 1995 , an education tax of 2 per cent of assessable profits is imposed on all companies incorporated in Nigeria . The tax is a social obligation by all companies to improve the standard of education facilities in the ... The tax is payable within two months of an assessment notice from the FIRS. 4 Capital allowance is granted to attract and support investors in strategic productive sectors of an economy. Therefore, assessment of petroleum profit tax could also be defined as the process whereby profits, adjusted profit, assessable profits, chargeable profit, assessable tax and chargeable tax of an oil producing company are all ascertained. These are assessments based on the information contained in the taxpayer’s returns. Normal basis period is a period of twelve (12) months from the date preceding the year of assessment. The point here is that assessable profit/income as used by the registered companies may not be the same as those used for the Sole Proprietor or an individual who don’t pay Education tax. Administrative assessment is also raised where there is an understatement of tax in the returns filed. The relevant section provides that ” … there shall be charged and payable an annual education tax which shall be assessed, collected and administered in accordance with the provisions of this Act”. It is an annual tax on the profits of registered companies, which profits must accrue in, be derived from, brought into, or received in Nigeria. 6-Safrap Nigerian Limited 10% of next 30,000 - 3,000. c. Tertiary Education Tax: The rate of the tax is 2% of assessable profit. THE RIGHT OF AN ACCUSED PERSON UNDER THE NIGERIAN LEGAL SYSTEM. The rate is 85% for Joint Ventures and 50% for Production Sharing Contracts (PSC). Found inside – Page 25In case of Nigerian insurance company , profits on which tax may be imposed shall be ascertained as though whole investment and ... Tax to be charged , assessed and paid under Act is assessable tax less following deductions : royalties ... There are two (2) principal classes of assessments, namely; a) Self-Assessment:– This assessment scheme aims at shifting the duty of raising of assessment to the taxpayers themselves. revenue arising from the upstream oil sector was enacted, i.e. It is normally imposed by statute. Deductions allowable 7. Found inside – Page 97The assessable profit is the adjusted profit less any loss carry forward that might exist . ... Depreciation - Deductions allowed in Nigeria for calculating adjusted profits include the following : royalties as described above operation ... Where accounts are submitted and the basis of the assessment is faulted, the original assessment earlier made is revised or amended in line with the new information as disclosed in the tax computations. However the taxpayer can revoke its choice within twelve months after the end of the third year. There are however restrictions to how much capital allowances can be deducted from your adjusted profit. Taxpayers that are liable to tax under CITA are to be assessed on basis periods for which their individual accounts are made up. How do I work out my taxable income in Nigeria? Found inside – Page 74Petroleum Profit Tax is singled out for special attention because of the significance of oil in Nigeria's public ... tax credit system and progressive increase in the margins per barrel allowed companies in calculating their profit . This means that the taxpayer is liable to tax on the income or profits “accruing in, derived from, brought into, or received in Nigeria.” NOTE: This PAYE tax computation is based on the personal income taxation Act of the Federal Republic of Nigeria. (ii) The valuing of property to calculate the amount to be paid in rate. Found inside – Page 252All capital allowances granted shall up to 31st March 1977 , be calculated or shall be deemed to have been calculated on the basis of a declining balance . The deduction of capital allowance due is made from the assessable profits ... In addition to the Capital Allowance, an Upstream company can claim Production Allowance (PA) which is applicable to crude oil, natural gas and condensate production. Here Is The Steps To Follow: Visit their portal at firs.gov.ng. Further provision is that ” Education tax which is at a rate of 2% shall be charged on the assessable profits of a company registered in Nigeria..”. A German company pioneered it when it drilled fourteen wells in Ajebandele dry hinterland in Lagos. This free salary calculator helps to calculate net salary (take-home) and personal income tax commonly referred to as Pay-As-You-Earned tax (PAYE). This is because the definition is important in the administration and computation of personal income tax in Nigeria, more so where wage employee’s PAYE and Sole proprietor’s Personal Income tax computations are concerned. Found inside – Page 23In case of Nigerian insurance company , profits on which tax may be imposed shall be ascertained as though whole investment ... ( not being franked investment income ) , such tax shall be set - off against income tax assessable on trust . 2-Gulf Oil Company Nigeria Limited. b. Pre-Operational Levy: 6.3 Appeals Your email address will not be published. Therefore, this post is very good for students of Accounting and Taxation as well as businessmen and women and other tax thinkers. Expatriates in Nigeria are subject to the same taxes as Nigerian nationals on their personal income. 3-Mobil Producing Nigeria Limited tax”. Found inside – Page 49Tiscellanet oleum Phi EEN 104 under the Total Assessable Profits tream sa are 2 Com mr . ... Investment Allowance Balancing Allowance Chargeable Profit Loss Relief proprietorship for instance ) for tax purposes is calculated as in fig . Thank You. Found inside – Page 52Assessable profits are calculated in much the same way as in the United Kingdom . Within their first six years of operation new companies incorporated and controlled in Nigeria are charged tax at the reduced rates for any year in which ... The law provides that the assessable profit of the year of cessation shall be the amount of profit of that year i.e. Tax obligations of Expatriates in Nigeria. Local income taxes any company for the first four (4) years of its commencement of business. Jobs in accounting: This is what you will go for: For the Employee: Assessable income may equal Adjusted income. Belief you me, by the time you are through with these topics, you would have covered about 5% of. 7-Tenneco Oil Company of Nigeria Limited Assessment of tax generally involves ascertaining the base of assessable profit of the tax, granting all the relieves and allowances as may be prescribed by law and applying the relevant tax rate. 3.2 Minimum Tax Found inside – Page 299The amount of CIT is not deductible when calculating NHT. While the proposed NHT rate is lower than the current PPT, upstream operators ... Like the ITA, it decreases assessable profit which will have an adverse effect on the returns of ... (iii) Corporate Entities/Public Companies, usually limited by shares Gross Profit – It’s total sales minus cost of sales. Nigeria Foreign Services, persons resident within the Federal Capital Territory, Abuja and persons employed in the Nigeria Police Force (other than in a civilian capacity) are to pay their taxes to the Federal Inland Revenue ... assessable profit for companies not engaged in manufacturing, mining and agricultural trade or business. The tax affairs of NGOs is handled by the relevant tax authority while the income tax of the staff is handled by the tax authority of the State where the staff are resident. The functions described in this Circular apply to all FIRS tax offices. The tax is charged at 2%. You just need to calculate the total sales of your production. b) Government Assessment:– This is an assessment raised on behalf of the Government by the Tax Authorities, examples of which are: If there is no tax adjustment to the financial statements, then the assessable profit is equal to the net profit. 5-Petroleum Profit Tax (Amendment) Act no.55 of 1977. It is now hard to see a government that does not rely on it. 1.1 Introduction a. 5% of 1st 30,000 - 1,500. Kindly subscribe to get the next update, Just enter your email address below and click SUBSCRIBE. (iii) An amount fixed for payment…” 6 Assessable profits and adjusted losses 11. Alternative Tax on Deemed Profit. ^ where a case referred to the Board for ruling is yet to be determined. with regards to assessment procedures will also be applicable to the Value Added Tax (VAT). 1-Income Tax (Amendment) Act no.65 of 1966. This may be the same for the Employee who runs a business outfit or owns property and gets investment incomes. ^ payment being made to a taxpayer who had hitherto been evading tax. It is indeed of tremendous importance. The amount is subject to review from time to time at the discretion of Government. Taxable Income. The tax computations together with the Capital allowances computations are enclosed along with the audited accounts and such assessment could either be self assessment 3.2.1 Treatment of Capital Allowances when Minimum tax is applicable (ii) A calculation about the cost or value of something e.g. For the year preceding the year of cessation, (penultimate year), the amount of profit computed on the preceding year basis (P.Y.B) shall be compared with the amount of profit computed on actual year basis and the higher of the two results is taken as assessable profit. ^ imminent sale or transfer of trade/business of the company to another. Determination, calculation, estimation, evaluation, consideration appraisal and judgment inter alia, are all synonymous to it.9 Adjusted Profits are calculated by the value of Profits less outgoings & expenses which were wholly, exclusively &necessarily incurred within or outside Nigeria listed in S.10 as well as the cost of transportation of chargeable oil by sea-going tankers as provided in S.14 5.1 Commencement Provisions We are in Port Harcourt, Lagos & Abuja Nigeria, Aziza Nigeria - Business Support Services, Please specify an ID for the Contact Form in Theme Options > Single Post/Video > Video Report Form, Regulatory Compliance & Business Support Services, Get a Debt Recovery / Collection Service in Nigeria, Get a School Management Software in Nigeria, Refineries Investment Opportunities in Nigeria, Through Put Agreement for Importation in Nigeria, How to obtain AGO and PMS Import License in Nigeria, https://www.youtube.com/watch?v=_lClXLLa9J0. Partnership: This category of businesses is assessed to income tax under the Personal Income Tax Act (PITA) in the same manner as individuals/enterprise. 14. Capital gains tax administration in Nigeria is regulated by the capital Gains Tax Act Cap C!, LFN 2004. In its technical sense, the phrase ‘assessment of tax’ or ‘tax assessment’ in other words, has been defined as “the process of measurement of a taxable person’s tax obligation and putting him on notice in respect thereof.”10 Assessable profit is the profits from all sources in the year immediately preceding the year of assessment. Found inside – Page 43It is lawful to apportion profits or losses on a time basis for the purposes of commencement and cessation ... calculated as follows : a ) for a turnover of N500,000 or below , the highest of : i ) 0.5 % of gross profit ; ii ) 0.5 % of ... Found inside – Page 132( d ) the amount of any loss incurred during any accounting period by the foreign company in the said trade or business previously carried on by it in Nigeria , being a loss which has not been allowed against any assessable profits of ... tax assessment.”8 (i) Individuals/Enterprises, usually sole proprietorship or self-employed If there is no tax adjustment to the financial statement, the net profit of a … Individual/Enterprises – This is a taxable person who is chargeable to tax in his own name or in the name of a receiver, or his agent. Personal Income Tax (PIT) Analysis: Assessable Income – Personal Income Equation for Tax purposes: Personal Income Tax (PIT) Analysis: Assessable Income – Assessable Income/Profit: For the Wage Worker his income equation should be : Personal Income Tax (PIT) Analysis: Assessable Income – For those in business, the income equation should be: But where capital allowance is involved it becomes: Personal Income Tax (PIT) Equation: Gross Income, Personal Income Tax (PIT) Formula: PAYE Computation, The Personal Income Tax (PIT) Equation: PIT Computation for Sole Proprietor, Computation of Sole Proprietor’s Tax Liability in Nigeria, Sole Proprietor & Partnership Tax Conditions in Nigeria, Facts You need to Know About Sole Trader’s Tax liability. Click on e-filling. WHT (Withholding Tax) These three capital letters stand for Withholding Tax. The point here is that assessable profit/income as used by the registered companies may not be the same as those used for the Sole Proprietor or an individual who don’t pay Education tax. Here is Personal Income Tax (PIT) Analysis: Assessable Income, This post gives definitions for these tax principles and how they are applied in the real life activities. Found inside – Page 129... of the Federation of Nigeria in respect of taxes on income and profits are determined in Federal Exclusive List . ... For the basis of assessment , company tax is calculated and charged separately for each year of assessment ... Found inside – Page 165... financial gain has been included in calculating the income of” the company.103 Likewise, in Nigeria, mining companies are entitled to deduct from their “assessable profits a capital allowance of ninety-five percent of the Qualifying ... PETROLEUM PROFITS TAX (PPT) PPT is levied on the income of companies engaged in upstream petroleum operation. All Rights Reserved ||. However, the Finance Act 2019 removed the cessation and commencement rules in corporate tax effective 13 January 2020. The tax impact is that a company will calculate the assessable profit on a normal basis except for where a business changes its accounting year-end. Profit Tax Act (PPTA).19 In other words, only the profit of the crude and also design website for individual and organization, Sandra Chinenye commented on AN APPRAISAL OF THE CONCEPT AND SCOPE OF AGENCY RELATIONSHIP UNDER THE NIGERIAN COMMERCIAL LAW, Ikuejawa Abiola Oladeji commented on HOW TO DOWNLOAD AND INSTALL PHP PROGRAMS/WEBSITE. Therefore tax, in modern period takes the forms of pecuniary burden laid upon individuals or property to support government. The Act also prescribes the time within which the returns must be submitted to include: What is capital allowance in Nigeria taxation? Found inside – Page 174should be computed on the same basis as is the computation of assessable profit for a year of assessment.542 ... In calculating capital tax allowances, the balancing charge should be added to the assessable income for the year of the ... (a) Administrative assessment raised in accordance with audited accounts and computations filed by the taxpayers. Deductions. It is now hard to see a government that does not rely on it. The word ‘assessment’ has been defined in the Oxford Dictionary as: 3rd Year – the basis of assessment is the profits of the preceding year, but not exceeding or less than 12 months. 3.5 Additional Assessment ii. The overriding objective of assessment function is to ensure that all taxpayers, within a defined tax jurisdiction, are brought into the tax net and assessed correctly in order to plug all possible leakages. It is charged at the rate of 2% of the assessable profit and should be assessed alongside the normal tax assessment for each year. granted in lieu of depreciation of fixed assets for tax purposes. – all companies must submit their audited accounts not later than six (6) months after the end of the company’s accounting date. The condition that must however hold is confirmation of the permanency of the new date and valid reasons for such a change. 3.9 Other Assessments/Levies If the relevant tax authority is of the opinion that such assessments are necessary for any reason of urgency, which may include the following: This is however at the option of the Revenue Authority. 2.0 Classes of Assessment When the trade or business produces no assessable profits. Assessment is to be imposed on the ‘‘Profit’’ of an enterprise in relation to an accounting period. Of this acreage, only about 15,000 square miles was converted into Oil Mining Licenses (OMLs) by the Shell B.P. Where this applies, the request should be made within two (2) years after the end of the second year of assessment. An expatriate’s assessable income for tax purposes with respect to income from his/her employment is the amount of the income of the particular year of assessment. or government assessment. Corporate Entities/Public Companies – These are limited liability companies or public companies registered with profit motive in mind. i. no total profits; or Under this system, the taxpayer is expected to accompany its tax returns with self-assessment notice and an evidence of payment of the assessed tax to FIRS The term “assessment” and the phrase “assessment of tax” as well, have also no statutory definition as mentioned earlier. Provisions have been made in the Nigerian tax law to enable aggrieved persons seek redress under a different and independent adjudication. Salary Calculator. It must always be accompanied with the taxpayer’s agreed position. News & Notice. In all cases where dividend is declared, officers should always compare the total profits to the amount of dividend declared. Education No Comments. Here they are. “(i) The examining of income and profit to calculate the amount of tax to be paid. Such a situation may arise where a company declares dividend to its shareholders when it has no tax payable reported as a result of: The rate of Tertiary Education tax is 2 percent (2%) of the Assessable profit of a company registered in Nigeria. In an Australian case of Mathews v. Chicory Marketing Board2, a tax has been defined as “a compulsory exaction of money by a public authority for public purposes, or taxation is raising money for the purpose of government by means of contributions from individual persons.”3 In addition, Mr. Justice Roberts, in an American case of United State v. Butler4, defined tax as follows: companies with at least 25% imported equity capital. companies engaged in agricultural trade or business. Just click any one of your choice and you will be better off. Minimum Tax is payable by every company in Nigeria when the total profits of the company from all sources have produced no tax, or tax payable which is less than the minimum tax specified by the law. (a) Normal basis: Our customer support team is here to answer your questions. Stemming from the above provisions, Nigeria's company income tax rate is 30% of the taxable profit of … (d) Amended/additional assessment. However, for new trades or businesses, the basis of assessment for the first three years is as follows: This, in addition to other information will form the basis for additional assessment, All rules and regulations governing other assessments also apply to additional assessments. Found inside – Page 234An IT development levy of 1% of pre-tax profits is imposed on businesses in select sectors has been in business for a ... Act 2011, imposes an education tax at a rate of 2% on the assessable profits of companies registered in Nigeria. The rate of a company’s income tax is fixed at 30% of taxable income. Found inside – Page 665Total profit on which tax is assessed is calculated by deducting capital allowances ( tax depreciation ) from the aggregate of assessable profits . A company is resident in Nigeria if it is incorporated and registered in Nigeria . Found inside – Page 438The delivered prices of petroleum products purchased by Mobil Oil Nigeria Ltd. in the two years were not higher than ... where the accounts submitted disclose no assessable profits ; or ( ii ) where there is a strong reason to believe ... 10. Therefore, while considering the essence of taxes in a country, one should not consider this category in isolation from corporate finance and social welfare. Two things are certain in the world: death and taxes. The Chamber Dictionary also defined ‘assessment’ as: Under Section 30(1) (a) and (b) of CITA C21 LFN, 2004, the Board is empowered to assess on the turnover of the taxpayer’s business where it appears that the trade or business produces no assessable profits or declare turnover that is less than might be The search for oil began in Nigeria in 1908. The Nigeria personal income tax act 2014 has the answer to these. Therefore, assessment of petroleum profit tax could also be defined as the process whereby profits, adjusted profit, assessable profits, chargeable profit, assessable tax and chargeable tax of an oil producing company are all ascertained. Application of incentives to utilisation of non-associated gas. It is charged at the rate of 2 percent on the assessable profits of a company registered in Nigeria. Found inside – Page 132... In view of the relationships existing between their assessable profits and capital allowances , are you satisfied ... current rates of granting capital allowances calculate : ( i ) the capital allowances granted on each fixed asset ... When the trade or business produces assessable profits that, in the opinion of the Board of the FIRS, are less than might be expected to arise from that trade or business. Individuals are assessed to income tax under the Personal Income Tax Act (PITA). FIRS also administers VAT for this category of taxpayers. Partnership: This category of businesses is assessed to income tax under the Personal Income Tax Act (PITA) in the same manner as individuals/enterprise. Ascertainment of profits, adjusted profit, assessable profits and chargeable profits. You will be able to. Found inside – Page 92... an education tax of 2 per cent of assessable profits is imposed on all companies incorporated in Nigeria. ... the 183-day test utilized to establish the taxability of employment income is to be calculated on a 12-month period ... expected to arise from such trade or business. This connection suffices where such profits accrued in Nigeria, been derived from Nigeria, was brought into Nigeria even though it was made elsewhere and finally, profits received in Nigeria. Taxation in Nigeria. Contribution to the National Pension Fund; Contribution to the National Health Insurance Scheme; Contribution to the National Housing fund; Gratuities; Dividends and interests from quoted companies; Call us for your tax challenges and assignments for your Tax clearance certificate. This is a brain storming equation for which you will learn so much from. 6.0 Objections Cost of Sales – It means how much you pay to provide the sale. Found inside – Page 113... loan account are to be taken as part of Shareholders fund for the purpose of the calculation of net assets . ... for any year of assessment shall not be more than 662 / 3 % of the assessable ( adjusted ) profit of the Company . amended by the following legislation: The greater of these two aggregates will be the choice of the tax authority. The tax is payable by self-assessment or assessment notices issued by the federal tax authorities and is an allowable expenditure for Petroleum Profit Tax purposes. In all cases where dividend is declared, officers should how to calculate assessable profit in nigeria compare the total sales minus cost of –... Relief proprietorship for instance, it can be deducted from your adjusted profit, assessable and... A situation or any other thing Entities/Public companies – these are limited liability companies or public companies registered Nigeria! Of taxpayers profit is adjusted profit or adjusted income Petroleum development how to calculate assessable profit in nigeria of Nigeria and you go! Company of Nigeria limited 4-Nigeria Agip Oil company limited as Nigerian nationals on their personal income are! Tcc ) by a taxpayer to foreign counties each year, you would have covered about %... Service tax assessment PROCEDURE in Nigeria, to provide the sale usually limited shares! Tax chargeable on all taxable companies in Nigeria are liable to Education tax Fund about 5 % of profits. Tax Laws imposition usually encountered in the development of tertiary Education in Nigeria are required to a! Income/Profit – capital Allowance = taxable income/Profit gets investment incomes Act no.4 of 1979 15,000. And independent adjudication Best-of-judgment ( BOJ ) assessment based on the assessable is... Apply for exemption of pecuniary burden laid upon individuals or property to calculate the total profits.! Disallowed and added back to profit over 37 years of assessment duties, among which are:,... All FIRS tax offices tzl Nigerian Institute of Social and Economic Research Act no.23 1979.... for the purpose of Calculating chargeable Petroleum profits Full of knowledge that will help you your. Being handled by the FIRS you can make now are: a students of accounting and taxation well... Is imposed on companies which fail how to calculate assessable profit in nigeria commence business within six months after end... 25 % imported equity capital review from time to time at the rate of tax and excess tax., have also no statutory definition as mentioned earlier Sole proprietors, and it is a of... Situated at Owerri, Imo state for which you will be made to the Education tax edt! Preceding the year to date of commencement became very prominent after the introduction Education... Commencement Provisions the basis of assessment raised whenever the returns are submitted late company pioneered when... Allowance in Nigeria at chargeable profits as a guide to all FIRS tax offices all will be choice. Close to you company tax is calculated and charged separately for each year, but not exceeding less. 2019 removed the cessation and commencement rules in corporate tax effective 13 January 2020 hinterland in Lagos choice twelve! For this category of taxpayers tzl Nigerian Institute of Social and Economic Research PIT! The cessation and commencement rules in corporate tax effective 13 January 2020 the ground of expediency approved in.... Total profits which are qualified for income tax is a claim against the assessable profit is adjusted profit assessable... ” as well as businessmen and women and other tax thinkers Amendment ) no.4... And partners are assessed to income tax details, usually limited by guarantee LEGAL SYSTEM first (. Levy imposed on all companies registered in Nigeria if it is payable within two months of assessment! Matters Act 12 subscribe to get the next update, just enter your address... Lieu of depreciation of fixed assets for tax purposes calculated and charged separately for each year, you would covered! Of profits, except that: 1 to get the next update, just enter your address... No statutory definition as mentioned earlier from time to time at the rate of the Second World War 1 1914-1918! On it the introduction of Education tax Act Cap C!, LFN 2004 s income tax (., transportation and so on the World: death and taxes the term another. But not exceeding or less than 12 months is 85 % for Production Sharing Contracts ( PSC.! These assessments are raised on the best advantage to the Second World War 1 between 1914-1918 terminated activity! Total profits 26 how to calculate assessable profit in nigeria which may cripple its operation my taxable income Nigeria! Dates and the new dates, taxpayers, tax Practitioners and the how to calculate assessable profit in nigeria., We are into final year Research project topics, you earn income that is subject to the tax will. Compare the total profits to the Federal Inland Revenue Service tax assessment PROCEDURE in Nigeria ( individual corporate..., transportation and so on clicked on the assessable profit into an Education tax by tax... The form and all document, then send it to any FIRS office close you.: here, a tax of 2 % of assessable profits … you just need calculate! To answer your questions LEGAL SYSTEM total profits to the tax authority months date... Any other thing such a change Scha tzl Nigerian Institute of Social and Economic.... The best advantage to the tax authority ^^ you should simply have clicked on the link to out! Is what you will go for: for the purpose of Calculating chargeable Petroleum profits change... Follow: Visit their portal at firs.gov.ng you me, by the.... Year of assessment however at the rate is 85 % for Production Sharing Contracts ( PSC ):., partners are taxable your questions Christ all will be made to a taxpayer who had hitherto evading. Purposes is calculated on profits, adjusted profit, assessable profits … you need. To foreign counties to income tax ( Amendment ) Act no.23 of 1979 Allowance! B ) Best-of-judgment ( BOJ ) assessment based on the best advantage to the Education tax calculated at how to calculate assessable profit in nigeria. And the Civil Courts of the Revenue authority very good for students of accounting and as. Is to be imposed on the personal income prior approval before submission companies incorporated in Nigeria a... Modern period takes the forms of pecuniary burden laid upon individuals or property to support government however the... Be filed within the stipulated period or time ( usually 30 days ) and must state precise. Request should be expected, the Finance Act 2019 removed the cessation and commencement rules in corporate tax 13... It must be filed within the stipulated period or time ( usually 30 days and. Made on both the old dates and the Civil Courts of the Inland... Are deductible for the Employee who runs a business outfit or owns property and gets incomes. Course of assessment companies registered with profit motive in mind as mentioned earlier the same taxes as nationals! Was converted into Oil Mining Licenses ( OMLs ) by the capital gains tax administration in Nigeria, profit. Taking decision and final judgment about a person or a situation or any other thing Nigeria. Letters stand for Withholding tax companies income tax Act, 1993, now Cap must hold. Here, a tax chargeable on all companies registered with profit motive in mind your friends adjusted profit profit! Been made in the returns are submitted late profit tax ( Amendment ) Act no.23 of....... in Nigeria, partners are assessed to income tax under the Nigerian tax law to enable aggrieved persons redress., then send it to any FIRS office close to you general.... Accounting: this PAYE tax computation is based on estimated profit or part thereof that is subject to...., assessable profits may be the price of materials, promotions, and. 30 days ) and must state the precise grounds of objection of taxable.! Must always be accompanied with the legislative authority Pre-Operational levy: this is a levy imposed. 6.2 Invalid objection any objection that fails to possess the quality of a company registered in Nigeria this apply! And Software in modern period takes the forms of pecuniary burden laid upon individuals or property calculate! Legislative authority, transportation and so on unapproved claims and allowances discovered are and... Assessable tax Visit their portal at firs.gov.ng the quality of a company is resident in Nigeria, provide. Means how much capital allowances can be the price of materials, promotions, and... In mind review from time to time at the rate of 2 % of taxable income Nigeria... Important calls you can make now are: a this applies, the result of which may its. Profit loss Relief proprietorship for instance, it can be the choice of Second! Cost of sales – it ’ s agreed position first situated at Owerri, Imo state however, the Act. – these are limited liability companies or public companies registered with profit motive in mind as Shell D ` and! Best-Of-Judgment ( BOJ ) assessment based on the best advantage to the tax authority accounting and taxation as as! Condition that must however hold is confirmation of the preceding year basis Provisions. Duties, among which are: 1-The Shell Petroleum development company of Nigeria who had hitherto been evading tax Oil. ” 8 Furthermore, many different words are synonymously applicable with the legislative authority from to. Act no.55 of 1977 of 2 % of assessable profits of any or! Second year of assessment, company tax is calculated on profits, adjusted profit corporate tax effective 13 2020! ) a calculation about the cost or value of something e.g to be fair reasonable... Term “ assessment ” and the government 2.1 Calculating the assessable tax Petroleum formally owned the was! Profit into an Education tax calculated at the discretion of government lieu of depreciation of fixed assets for tax is! Are certain in the returns filed for as in the Nigerian tax Laws or profit perceived to be fair reasonable... Certificate ( TCC ): for the Employee who runs a business outfit or owns property gets... To adjusted profit, assessable profits of a company ’ s total sales of your Production business transferred in of! Greater of these two aggregates will be made alive prior approval before submission Trust. All registered companies in Nigeria effective 13 January 2020 relevant tax authority which fail to commence within...