Our customer support team is here to answer your questions. Your email address will not be published. Partnership: This category of businesses is assessed to income tax under the Personal Income Tax Act (PITA) in the same manner as individuals/enterprise. “(i) A process in which you make a judgment about a person or situation WHT (Withholding Tax) These three capital letters stand for Withholding Tax. 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 ... 6.0 Objections 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. Assessment function in an Integrated Tax System includes filing and assessment duties with respect to all taxes being administered by FIRS among which are: PPT, CIT, VAT, WHT, CGT etc. All taxpayers, including those granted exemption from tax, are required to file their tax returns to the relevant Tax Authority every year. Found inside – Page 1994It was whether the plaintiff could bring an action under the Fatal Accidents Law of the Eastern Region of Nigeria for ... the assessable profits of any company chargeable with tax cannot readily be ascertained, to assess and charge the ... Assessable income became very prominent after the introduction of Education tax by Education Tax Act, 1993, now Cap. Notify me of follow-up comments by email. 1-Income Tax (Amendment) Act no.65 of 1966. 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 ... Under the law, a taxpayer has the choice of election between the normal basis period and actual basis period for the second and third years of the commencement of trade. 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. 3.8 Assessment Levied on Dividend Provision where no Tax is Computed or Payable OPLs and OMLs). It is charged at the rate of 2% of the assessable profit and should be assessed alongside the normal tax assessment for each year. In such a case, the assessable profits of the year of assessment in which the change occurs and the two subsequent years are to be computed at the discretion of the relevant tax authority. tax”. 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 ... In practice, calculations are made on both the old dates and the new dates. 3-Oil Terminal Dues Act no.9 of 1969. Application of incentives to utilisation of non-associated gas. The amount of penalty at present is N25, 000for the first month in which the failure occurs and N5,000 for each subsequent month of failure. 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. 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 . Taxation in Nigeria. FEDERAL INLAND REVENUE SERVICE TAX ASSESSMENT PROCEDURE IN NIGERIA. Another contribution on this issue came from a scholar Okonkwori. Your email address will not be published. Capital gains tax administration in Nigeria is regulated by the capital Gains Tax Act Cap C!, LFN 2004. 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. 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). It must be filed within the stipulated period or time (usually 30 days) and must state the precise grounds of objection. 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 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 ... 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. Ascertainment of profits, adjusted profit, assessable profits and chargeable profits. from January of the year to date of cessation. The residual was returned to the Nigerian government in 1960.15 Assessable profits and adjusted losses 11. b. Pre-Operational Levy: This is assessable income. 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. It is also governed by Tertiary Education Trust Fund (Establishment, Etc.) The rate of tax is 2% of Assessable profits. 8- Petroleum Profit Tax (Amendment) Act no.23 of 1979. ^ intended remittances to foreign partners. C21 LFN, 2004 as amended). This tax is remitted to the Federal Inland Revenue Service, and it is payable on a preceding year basis. Such appeals could be referred to the Tax Appeal Tribunal and the Civil Courts of the land. 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 ... E4 LFN 2004 as amended. ... An Act to impose a tax upon profits from the winning of Petroleum in Nigeria, to provide for the Just click any one of your choice and you will be better off. Where this applies, the request should be made within two (2) years after the end of the second year of assessment. 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 rate is 85% for Joint Ventures and 50% for Production Sharing Contracts (PSC). Penalty for Late Returns: Kindly subscribe to get the next update, Just enter your email address below and click SUBSCRIBE. ^ in all other cases of emergency. This means that all registered companies in Nigeria are required to pay a percentage of their assessable profit into an Education Tax Fund. Employees, sole proprietors, and partners are taxable. Assessment is to be imposed on the ‘‘Profit’’ of an enterprise in relation to an accounting period. Such an assessment is made by assuming a fair percentage of turnover as assessable or adjusted profit for the year to which capital allowances and other deductions are charged before arriving at total taxed under a special and separate legislation, that is the Petroleum ^ payment being made to a taxpayer who had hitherto been evading tax. These are: (ii) The action of assessing somebody or something … When the true amount of the assessable profits of the company cannot be ascertained. The 3 important calls you can make now are: Finally, please share to reach your friends. Every taxpayer is at liberty to change its accounting date, if for any reason, it finds it expedient to do so. The individual tax payer should be able to adjust his/her  income/profit with the following: We have other articles on Personal Income Tax Act provisions which could help you understand this topic better. (d) Amended/additional assessment. Thank You. A German company pioneered it when it drilled fourteen wells in Ajebandele dry hinterland in Lagos. Founder/Managing Partner of Complete Full Marks Consultants Ltd. An Economist turned Chattered Accountant and Tax Practitioner with over 37 years of industrial experience. It is a process for taking decision and final judgment about a person or a situation or any other thing. 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. It was known before as Shell D` Arcy and first situated at Owerri, Imo state. Gross Profit – Business Expenses  + Other income  – Consolidated Relief Allowance =, Gross Profit  – Business Expenses  + Other Income – Capital Allowance –  Consolidated Relief Allowance =, The fact that these set of tax payers are not. 95 of 1979. This is a levy being imposed on all taxable companies in Nigeria to assist Government in the development of tertiary education in Nigeria. (c) 0.25% of Paid-up Share Capital Deductions allowable 7. 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. It is normally imposed by statute. Ask us anything! It is to be levied when the taxpayer applies for current Tax Clearance Certificate (TCC). The tax computations together with the Capital allowances computations are enclosed along with the audited accounts and such assessment could either be self assessment 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. If there is no tax adjustment to the financial statements, then the assessable profit is equal to the net profit. The Chamber Dictionary also defined ‘assessment’ as: ... That is, it does not form part of the assessable profit for the purpose of Education Tax calculation; You can also get in touch with us directly by filling the feedback form on the Right. It is charged at the rate of 2 percent on the assessable profits of a company registered in Nigeria. This is levy imposed on companies which fail to commence business within six months after their incorporation. Consequently, Tertiary Education Tax (formally Education Tax) is a tax imposed on the assessable profits of all companies registered in Nigeria including companies subject to tax under Petroleum Profits Tax Act. 14. 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. (ii) A calculation about the cost or value of something e.g. It is also used on … It is rather, a kind of an enforced contribution exacted in accordance with the legislative authority. (b) Election option Based On Actual Year Basis This means that the taxpayer is liable to tax on the income or profits “accruing in, derived from, brought into, or received in Nigeria.” Deductions. 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. Found inside – Page 54Thus , capital allowances must be included in all calculations of the cost of ownership of assets and treated as inflows in year ... 66.7 % of the assessable profits The following capital allowance schedule is applicable in Nigeria . 3rd Year – the basis of assessment is the profits of the preceding year, but not exceeding or less than 12 months. 5-Phillips Oil Company Nigeria Limited. granted in lieu of depreciation of fixed assets for tax purposes. Assessable Income vs. VAT assessment has not been specifically mentioned in this circular, but it is to be understood that with the introduction of the Integrated Tax System, which involves the administration of all taxes at one-stop-shop, what generally applies to income tax Jeopardy/Protective Assessment Taxpayers are free to raise objection to any government assessments, which they believe are incompatible with the relevant tax laws or where they are of the opinion that such assessments were raised on wrong premises and are therefore objectionable. (ii) Partnership, association of two or more persons coming together in business with a view to making profit. 5.3 Changes in Accounting Date 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 . Corporate Entities/Public Companies – These are limited liability companies or public companies registered with profit motive in mind. in Nigeria are normally taxed under the Companies Income Tax Act.17However, due to the peculiarities and complicated nature of oil . The rate of Tertiary Education tax is 2 percent (2%) of the Assessable profit of a company registered in Nigeria. Scan the completed form and all document, then send it to any FIRS office close to you. 3.7 Assessment On Turnover Taxpayers that are liable to tax under CITA are to be assessed on basis periods for which their individual accounts are made up. 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 ... 6-Safrap Nigerian Limited  companies engaged in agricultural trade or business. It occupies a great space and significant position in the economy of the country. Towards the end of 1960, there were about nine petroleum exploring and producing companies holding Nigerian concessions (i.e. How to Apply for Company Annual Tax Return Riling, How to Obtain Individual Tax Clearance Certificates, Chartered Institute of Taxation of Nigeria, Energy Models Analyst @ OPEC Vienna Apply Online, Enlistment into The Nigerian Navy DSSC Course 26: Application Form. However FIRS administers VAT for this category of businesses. Expatriates in Nigeria are subject to the same taxes as Nigerian nationals on their personal income. i. no total profits; or The levy is N20, 000 in the first instance and N25, 000 for any other year, if it still has not commenced business. 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 © 2020 Project Gist International. Gross Profit – It’s total sales minus cost of sales. The 85% of assessable profits less 170% of petroleum investment allowance restriction of the Capital Allowance under PPTA is removed under the PIB. oil producing companies that is subject to the PPTA.20 Usually, the tax affairs of this category of taxpayers are to be handled by the State Internal Revenue Service (SIRS), where the taxable person is domiciled or resides while FIRS handles the tax affairs of Abuja residents, Police, Armed forces and Foreign Affairs Officials. Jobs in accounting: This is what you will go for: For the Employee: Assessable income  may equal Adjusted income. This is a brain storming equation for which you will learn so much from. In all cases where dividend is declared, officers should always compare the total profits to the amount of dividend declared. b) Government Assessment:– This is an assessment raised on behalf of the Government by the Tax Authorities, examples of which are: Re: How To Calculate Your Income Tax In Nigeria (Ugometrics) by debosky ( m ): 4:20pm On Oct 04, 2011. This is however at the option of the Revenue Authority. The Royal Dutch Shell and the British Petroleum formally owned the company. 13. If there is no tax adjustment to the financial statement, the net profit of a … Taxation emerges largely in our societies. 2-Petroleum Profit Tax (Amendment) Act no.1 of 1967. The tax is charged at 2%. Click on e-filling. (ii) The valuing of property to calculate the amount to be paid in rate. fire disaster or need to obtain prior approval before submission. (d) 0.25% of Turnover up to N500, 000. Assessments are normally raised on the Income or Profit of companies or corporation arising from trade or business carried on by the company. Tertiary Education Tax: This is a special tax levied on all companies in Nigeria at the rate of 2% … 1 Like. 4 Capital allowance is granted to attract and support investors in strategic productive sectors of an economy. LAW PROJECT TOPICS AND MATERIALS.Profit Tax Individuals are assessed to income tax under the Personal Income Tax Act (PITA). 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. Of this acreage, only about 15,000 square miles was converted into Oil Mining Licenses (OMLs) by the Shell B.P. It is now hard to see a government that does not rely on it. 7-Petroleum Profit Tax (Amendment) Act no. 10% of next 30,000 - 3,000. Generally, taxpayers are categorized according to the legal status of their businesses which includes the following: 1.0 Introduction Assessable profit is the profits from all sources in the year immediately preceding the year of assessment. 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. 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. (iii) The amount of a tax or charge.”7 Therefore the term “assessment” in it literal sense has a broad meaning. Longman Dictionary also defined the word as: 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 ... News & Notice. – all companies must submit their audited accounts not later than six (6) months after the end of the company’s accounting date. Education Tax is a tax chargeable on all companies registered in Nigeria at chargeable profits as a contribution to the Education Tax Fund. Found inside – Page 308Chargeable Profit ( S. 15 PPTA ) This is assessable profit less whichever is lesser of ( i ) Capital allowances as calculated in the normal practice ( this is exclusive of investment tax credit ) . OR ( ii ) a sum equal to 85 % of ... Found inside – Page 39the assessable profits of any trade or business transferred in pursuance of Part X of the Companies Decree , 1968. ... a replacement for an asset which has been damaged or destroyed in any part of Nigeria at any time during the period ... tax assessment.”8 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. They are often unlimited or at best limited by guarantee. A tax in general understanding of the term and as used in constitution, signifies an exaction for the support of government.”5 What is capital allowance in Nigeria taxation? 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. for the 3 rd year and for each subsequent year, the assessable profits shall be the profits from the day after the accounting period just ended. Critical Appraisal of the Relevancy and Admissibility of Electronically Generated Evidence in Nigeria. Stemming from the above provisions, Nigeria's company income tax rate is 30% of the taxable profit of … 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.

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