Petroleum Profits Tax (PPT)

(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.