FIRS

Petroleum Profits Tax (PPT)

Petroleum Profits Tax is imposed on income of companies in petroleum operations

(Upstream)
  • The tax is governed by the Petroleum Profits Tax Act, Cap P13 LFN 2004 (as amended)
  • Companies liable to PPT are not liable to Companies Income Tax(CIT) on the same income
Rates of the Tax
  • For Joint Venture and Sole Risk Companies in their first five years of operation, the rate of tax is 65.75% of chargeable profit
  • For Joint Venture and Sole Risk Companies in operation for more than five years, the rate of tax is 85% of chargeable profit
  • For a Company under Production Sharing Contract, the rate of the tax is 50% of chargeable profit
  • Education Tax is a deductible expense in computation of assessable profits of petroleum companies
  • Returns of estimated tax for each accounting period are to be submitted not later than two months after the commencement of the accounting period
  • Final returns for each accounting period shall be filed within five months after the expiration of the accounting period
  • The penalty for late submission of a return is a penalty of N10,000 and a further sum of N2,000 for each and every day the failure continues
  • Any instalment of tax not paid on the due date shall attract a penalty of ten percent (10%) and interest at prevailing minimum rediscount rate of the CBN and if payment is not made within one month, enforcement shall take place.