Recalcitrant oil and gas firms operating in the country may be in for a difficult time as the Federal Government is set to impose a fine of N10 million for the late filing of tax returns that occurs on the first day.
The new regime of fine imposition is contained in the new Petroleum Industry Act(PIA) signed by President Muhammadu Buhari, on Monday.
The penalty also include a subsequent N2 million fine for each subsequent day the failure to file tax continues while another N20 million fine is applicable to an offence where no penalty is prescribed.
Under the fiscal framework of the PIA, the Federal Inland Revenue (FIRS) is to collect hydrocarbon tax of 15 to 30 per cent on profits from crude oil production, CIT at 30 per cent and education tax at 2 per cent which will no longer be tax deductible.
The Nigerian Upstream Regulatory Commission will collect rents, royalties, and production shares as applicable while the Nigerian Midstream and Downstream Petroleum Regulatory Authority will collect gas flare penalty from midstream operations.
The framework explained further that, generally, expenses must be wholly, reasonably, exclusively and necessarily incurred to be tax deductible.
However, a cost price ratio limit of 65 per cent of gross revenue is imposed for hydrocarbon tax deduction purposes, any excess cost incurred may be carried forward.
‘‘No tax deduction for head office costs while tax deduction of interest on monies borrowed is subject to the satisfaction of the commission that the fund was employed for upstream operations and the interest rates reflect market conditions’.’
Special Adviser to the President on Media and Publicity, Femi Adesina, had, on Monday, announced the signing of the PIB with the title, ‘President Buhari Signs Petroleum Industry Bill Into Law’.
The presidential spokesman said his principal signed the controversial bill into law while working from quarantine.
Adesina said, “Working from home in five days quarantine as required by the Presidential Steering Committee on COVID-19 after returning from London on Friday, August 13, the President assented to the Bill Monday, August 16, in his determination to fulfill his constitutional duty.
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