Thread by @WoleOluyemiCo

I got this post from three people already and let me try to address some of the issues raised by @AmakaAnku - some of which are, I believe, innocent errors probably due to inadequate information.

https://twitter.com/AmakaAnku/status/1260232762587590656

In the Nigerian tax system, Company Income Tax (CIT) is chargeable on the profits of all companies apart from those engaged in oil exploration and production.

This is the basis of corporate taxation for companies in Nigeria.

Expenses are deductible if they are 'wholly, exclusively, necessarily and reasonably' incurred in the process of making the taxable profits.

For agricultural companies, costs such as labour costs, debt servicing costs, cost of seedlings, transportation and storage are deductible

So, in Nigeria, all agricultural companies are able to deduct the costs of labour, debt servicing costs, fertilizer, seedlings, transport, storage, etc before arriving at their taxable profit, along with several other reliefs that are available for the agricultural sector.

Therefore, Amaka missed this position of the Nigerian tax law (it’s not even a new law as it has been there before I started my accounting degree in 1996) in her argument, especially when she was comparing with the oil and gas sector.

For the Petroleum Profit Tax (PPT), which is charged at 85% vs the 30% for regular companies, the oil and gas companies pay their taxes in advance (based on estimates) unlike the agricultural and other companies that pay in arrears (on a preceding year basis).

So, the good news is that the Nigerian tax laws are already ahead of Amaka’s thoughts and suggestions.

On this one, @AmakaAnku should be a strong #ProudlyNigerian advocate 😁

The tax regime for an oil and gas company may not necessarily be at the 85% I mentioned above. There are instances where a lower rate may be applicable depending on the type of contract entered into by the company.

The lower rates may be applicable in the instances where the company is within the first five years of operation and those involved in a production-sharing contract (PSC) or agreement (PSA).

However, any activity that is not regarded as petroleum operation is subject to tax at a rate of 30% irrespective of the fact that the business activity is performed by an “oil and gas” company.