Finance Act 2021 Series 17: Export profits from Upstream, Midstream & Downstream Petroleum operations no longer exempt from CIT

Prior the Finance Act 2021, the profits of any Nigerian company in respect of goods exported from Nigeria was exempted from companies income tax, if the proceeds of such exports are used for the purchase of raw materials, plant equipment and spare parts. 

Under the Finance Act 2021, this exemption no longer covers companies engaged in the Upstream, Midstream or Downstream Petroleum operations. 

This is expected, given that the bulk of the industries’ produce – crude oil, is majorly exported. And, the Petroleum Industry Act imposes companies income tax (rather than the hitherto applicable Petroleum Profits Tax) on profits of companies engaged in petroleum operations. Therefore, sustaining this exemption from companies income tax would only nullify the new income tax provision of the Petroleum Industry Act. 

For further enquiries, discussion, advisory or help around complying with these new laws, please send us an email via clients@vi-m.com. You will be able to access all our explanatory write-ups on each of the major changes to the laws, brought about by the Finance Act 2021 and the practical ways in which they will affect taxpayers going forward, under our website group link – https://www.vi-m/category/Finance-Act-2021.