Companies' Income Tax Act

Last updated: 23 December 2020

Sec. 9 A tax shall be assessed on the profits of any company “accruing in, derived from, brought into, or received in, Nigeria.”

Part VI offers incentives to a "company engaged in gas utilisation (downstream operations)":

Sec. 39(1) (a) an initial tax-free period of three years which may, subject to the satisfactory performance of the business, be renewed for an additional period of two years [added in 1998];

(b) as an alternative to the initial tax free period granted under paragraph (a) of this subsection, an additional investment allowance of 35% which shall not reduce the value of the asset, so however that a company which claims the incentive provided under this paragraph shall not also claim the incentive provided under paragraph (c)(ii) of this subsection [added in 1999];

(c) accelerated capital allowances after the tax-free period, that is – (i) an annual allowance of 90% with 10% retention, for investment in plant and machinery; (ii) an additional investment allowance of 15% which shall not reduce the value of the asset [added in 1998];

(d) tax free dividends during the tax free period [with certain conditions] [added in 1999]; (e) interest payable on a loan obtained with the prior approval of the Minister for a gas project shall be tax deductible. (2) tax free period begins on the day the company commences production as certified by the Ministry of Petroleum Resources [(e) and (2) were added in 1998].

The section defines "gas utilisation" as "the marketing and distribution of natural gas for commercial purposes and includes power plant, liquified natural gas, gas to liquid plant, fertiliser plant, gas transmission and distribution pipelines" [added in 1998].

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