Petroleum Profits Tax Act

Country / jurisdiction: Nigeria · Year: 1999 · Status: In force · Level: National · Type: Voluntary

Taxes shall be levied on the profits of companies engaged in petroleum operations (Sec. 8).

Sec. 9(3) allows for adjusted profits (profits after deductions in Sec. 10(1) and adjustments made under Sec. 14).

Sec. 10 deductions include – (c) royalties for natural gas sold and actually delivered to the Nigerian National Petroleum Corporation or to another commercial buyer/customer.

In addition, Sec. 11 was added in 1998 and amended in 1999, to offer additional incentives for “utilisation of associated gas.” Specifically, oil/gas separation, and delivery of associated gas can be included in capital investments for oil development and deducted from profits. The company must still make flare payments for any gas flared; keep these expenses separated out from other natural gas utilisation expenses (which are deductiable under the Companies Income Tax Act); invest in LNG facilities to supply gas in usable form downstream. GTL expenses also can be deducted, and gas sent to these facilities is not taxed or assessed royalties.

Sec. 12 was added in 1999, and allows expenses for non-associated gas to be deducted the same way.

This Act has been repealed by the Nigeria Tax Act, 2025 that will come into effect on 1 January 2026.

Official source: https://lawsofnigeria.placng.org/laws/P13.pdf