18 Jan




Similarity: both charged on the profit of corporate entities. Their provisions relating to objections, appeals, offences and penalties are substantially similar to that of the CITA.


  1. The taxable companies: under the CITA, companies in general are subject. However, Section 8 of the PPTA levies tax on companies engaged in upstream petroleum operations. Petroleum operations is defined in Section 2 as the winning or obtaining and transportation of chargeable oil in Nigeria… on it own account. This excludes companies engaged in refining. In Shell V FBIR, shell sought to deduct demurrage incurred while transporting oil. The court held that by virtue of Section 2, transportation is part of petroleum operations. Gulf V FBIR.
  2. Accounting period: under CITA although it has two periods. A company can determine its accounting period. From the beginning of its accounting period to the end. Under the PPTA the accounting period must start from 1st of Jan to 31st Dec as defined in Section
  3. Computation: for PPT differs from that of the CITA. , the FIRS charges based on the true market value. The fact that the petroleum company sold at an undervalue, is irrelevant-Section 9 PPT. there is no “reasonably” required in PPT. It would be sufficient when the expenses are wholly, exclusively and necessarily incurred. The CITA includes “reasonably”. In practice, the FIRS requires that such expenses are reasonable and can adjust the expenses of the Petroleum Company.
  4. Deductibles: Section 10 PPT differs from Section 24 of the CITA. In PPT rents incurred for OML, non-productive rents (i.e. no oil is gotten even after drilling), royalties, sums incurred to the FG by way of customs and excise. Just like under the CITA, capital withdrawn, sum recoverable under insurance, depreciation, and so on are not deductible. Shell V FBIR the Supreme Court allowed deductions on equitable grounds. In this case, Shell sought to deduct expenses incurred:
    • In converting the currency to Pound Sterling following the CBN directive.
    • Payment of CBN commission for payment of petroleum profits tax.
    • Scholarship expenses of 257,550
    • Gifts and donations.

At the Body of Appeal Commissioners, the fourth was abandoned. The commissioners dismissed shell’s appeal. They then went to the FHC which allowed only the exchange loss and CBN commission but dismissed the Scholarship expenditure. At the Court of Appeal, the ruling of the Appeal Commissioners was restored. At the Supreme Court, equity was invoked to allow the exchange losses. However, we should note that there is no equity in taxation-Cape Brandy Syndicate V IRC, Aderawos Trading Co V FBIR. It has been noted in Re Diplock that equity follows the law.

  1. Assessable profit under CITA differs from that under PPT.
  2. Tax Rate: Section 19PPTA provides 85 percent (Concessionary rate of 65.75 percent for companies that are yet to make bulk disposal of chargeable oil) is chargeable while under the CITA it is 30 percent-Section 40CITA .
  3. Accounts and Returns: date for filing returns vary. It is done on a preceding year basis under the CITA and Current year basis under the PPT-Section 28PPTA because the government cannot wait to get the revenue from oil. What happens is that the oil companies estimate their profit based on the previous year and start to net it off in 12 instalments. On the 13th instalment, they compute their actual profit and pay the difference between what they have already paid and what they actually earned for the year. Where from the final computation, they ought to have paid less, then they are entitled to a refund. Currency of payment is always currency of transaction.

MOUs (1986, ) have been entered to guarantee a profit margin (2 dollars per barrel) for the companies by enhancing exploration and development activities of oil companies in the country and accelerate implementation of gas utilization projects and ameliorate tax burden on oil producing companies.



Quite eccentric really

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