This research focuses on the assessment of Petroleum Profit Tax (PPT) within the upstream oil sector in Nigeria, addressing key issues in its administration and calculation. Despite its economic significance, the Petroleum Profit Tax Act (PPTA) and other Nigerian tax laws lack precise definitions for terms such as tax and assessment of tax, creating ambiguities in interpretation and enforcement. Drawing insights from international definitions and scholarly contributions, the study explores the process of PPT assessment as the measurement of taxable obligations of oil-producing companies. The historical context highlights the evolution of Nigeria's petroleum industry, from early exploratory efforts to the establishment of regulatory frameworks, including the enactment of the PPTA and its subsequent amendments. The research identifies numerous challenges, including weak tax administration, complexities in PPT calculations, and widespread tax evasion/avoidance. These issues stem from institutional inefficiencies, inadequate professional training, insufficient resources, and the technical intricacies of the oil sector. The study aims to critically analyze and appraise relevant provisions of the PPTA, identify loopholes, and propose solutions to enhance the efficiency of PPT assessment and administration. It underscores the need for a robust tax administration system with highly skilled professionals to manage the complexities of petroleum taxation. Ultimately, the research aspires to serve as a valuable tool for simplifying PPT assessment and fostering a more efficient taxation system in Nigeria’s oil sector.
TABLE OF CONTENTS
Title Page i
Work Statement .ii
Declaration iii
Certification ..iv
Dedication .v
Acknowledgement vi
List of Cases vii
List of Statutes viii
Table of Contents .ix
CHAPTER ONE
1.0. GENERAL INTRODUCTION . 1
1.1. Introduction 2
1.2. Aims and Objectives ..8
1.3. Problems of the Research 9
1.4. Justification/ Significance of the Research ..15
1.5. Scope of the Research ..19
1.6. Literature Review .20
1.7. Research Methodology .23
1.8. Organizational Layout ..23
CHAPTER TWO
2.0. THE ROLE OF THE FEDERAL BOARD OF INLAND REVENUE IN RELATION TO THE ASSESSMENT OF PETROLEUMPROFITTAX ..27
2.1. Introduction ..27
2.2. Structure and powers of the Federal Board of Inland Revenue .34
2.3. The Operational Arm of the Federal Board of Inland Revenue .45
2.4. Petroleum and International Tax Department ..49
3.0 CHAPTER THREE
THE PROCESS OF MAKING THE ASSESSMENT OF
PETROLEUM PROFIT TAX ..56
1.13. Introduction .56
1.14. Preparation for Making the Assessment of Petroleum Profit Tax. . .64
3.2.1. Classification of PPT Assessment 64
3.2.1.1. Original Assessment 64
3.2.1.2. Estimated Assessment .. ..65
3.2.1.3 Additional Assessment . ..67
3.2.1.4 Amended Assessment 71
3.2.1.5 Revised Assessment ..72
3.2.1.6 Final and Conclusive Assessment .. 73
3.2.1.7 Previous Assessment.. .74
3.2.1.8 Current Assessment . 74
3.2.1.9 Official Assessment 74
3.2.1.10 Self Assessment. 75
3.2.2. Preparation and Submission of Returns For Making the Assessment of Petroleum Profit Tax .. 75
3.3.0. Making the Assessment of Petroleum Profit Tax. 81
3.3.1. Company’s Assessment 81
3.3.2. Board’s Assessment .83
3.3.3. Steps in Making the PPT Assessment 85
3.3.3.1 Ascertainment of Profits .87
3.3.3.2 Ascertainment of Adjusted profits .. 90
3.3.3.3 Ascertainment of Assessable Profit 107
3.3.3.4 Ascertainment of Chargeable Profit 109
3.3.3.5 Ascertainment of Assessable Tax 125
3.3.3.6 Ascertainment of Chargeable Tax ..126
3.4.0. Memorandum Of Understanding (MOU) and the Assessment of Petroleum Profit Tax .128
3.4.1. Concept of Memorandum of Understanding ..128
3.4.2. Historical Background of the Memorandum of Understanding (MOU) 130
3.4.3. Computation of Chargeable Tax under the year 2000 MOU version ..131
3.5.0. Appeals Against the Petroleum Profit Tax Assessment . 149
3.5.1. Company’s Right Prior to the Appeal 149
3.5.2. Company’s Right of Appeal to Appeal Commissioners 150
3.5.3. Appeals to the Federal High Court .155
3.5.4. Right of Appeal to the Court of Appeal ..158
CHAPTER FOUR
4.0 OFFENCES AND PENALTIES AGAINST THE PETROLEUM PROFIT TAX ASSESSMENT ..161
4.1. Introduction 161
4.2. Statutory offences Against the Petroleum Profit Tax ..163
4.3. Penalties Against the Petroleum Profit Tax Avoidance / Evasion .. 16
5.0. CHAPTER FIVE
SUMMARY OF FINDINGS AND SUGGESTIONS/ RECOMMENDATIONS ..173
5.1. Summary of Findings . ..173
5.2. Suggestions / Recommendations .. 178
BIBLIOGRAPHY ..181
