President Muhammadu Buhari has proposed stiff penalties of up to N20 million against first offenders among oil companies operating in the country and which fail to comply with the provisions of the Petroleum Profit Tax Act.
He also proposed an additional N2 million daily after the first offence.
The stiff penalties and several other provisions, which include payment of tax on what the government described as digital assets, are contained in the 2022 Finance Act recently sent to the National Assembly by the President to guide the implementation of the 2023 budget.
The Finance Act also proposes an amendment to some sections of the Petroleum Profit Tax Act by introducing a new section which requires every company engaged in petroleum operation in the country to give account of its profits or losses every year and prepare a statement of accounts of its profits or losses.
Such a corporate boy is also required to compute its actual adjusted profit or loss and actual assessable profits of that period for the purpose of determining Petroleum Profits Tax.
In connection with the Second Schedule to the Act, such company is expected to submit a schedule showing the residues at the end of that period in respect of its assets, all qualifying petroleum expenditure incurred by it in that period, the values of any of its assets disposed of within the period, and the allowances due to it under that schedule for that period among others.
It also states that “every company engaged in petroleum operations shall, with respect to any accounting period of the company and within five months after the expiration of that period, deliver to the service a copy of its accounts, bearing an auditor’s certificate of that period, in accordance with the provisions of subsection (1) of this section and copies of the particulars referred to in subsection (1) of this section relating to that period with the copy of the delivered company accounts and each copy of those particulars shall contain a declaration signed by authorised officer of the company or by its liquidator, receiver or the agent of the liquidator or receiver, that the same is true and complete”.
The proposed amendment also states that “notwithstanding the provisions of this section, every company which is yet to commence bulk sales or disposal of chargeable oil, shall file with the service its audited accounts and returns within 18 months from the date of its incorporation, in the case of a newly incorporated company”.
It also states that “within five months after any period ending on December 31 of the following year, in the case of any other company, provided that where there is an interval between December 31 of the preceding year and the date on which the company commences the bulk sale or disposal of chargeable oil or condensate, the interval shall be deemed to form part of the preceding period”.
The law provides that “a company which fails to comply with the provisions of subsection (2) or (3) of this section is liable to pay as penalty for late filing, N10 million on the first day the failure occurs and N2 million for each and every subsequent day in which the failure continues; or other sum as may be prescribed by the Minister of Finance by Order published in the gazette”.
The amendment also introduces a new Section 51, which states that “a person who fails to comply with the provisions of this Act or any regulations made under this Act for which no other penalty is specifically provided shall be liable to an administrative penalty of N10 million, and where the default continues beyond a period stipulated by this Act or regulations, the person shall be liable to a further administrative penalty of N2 million for each day the default continues or such other sum as may, by order, be prescribed by the Minister of Finance”.
In addition, it says: “Notwithstanding the provisions of subsection (1) of this section, a person who is found guilty of an offence under this Act or regulations made under this Act for which no other penalty is specifically provided, shall, upon conviction, be liable to a fine of N20 million or such other sum as may, by oOrder, be prescribed by the Minister of Finance, or to imprisonment for six months or to both fine and imprisonment.”
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Besides, it provides that “a person who fails to comply with the requirements of a notice served on him under this Act; fails to comply with the provisions of section 30 of this Act; without sufficient cause fails to attend and answer to a notice or summons served on him under this Act or having attended fails to answer any question lawfully put to him; or fails to submit any return required to be submitted under sections 30 or 33 of this Act, shall be liable to administrative penalty prescribed under subsection (1) of this section or upon conviction, be liable to penalty prescribed under subsection (2) of this section.
The Finance Act is expected to amend the Capital Gains Tax Act, Companies Income Tax Act, Customs, Excise Tariff, etc (consolidation) Act, Personal Income Tax Act and Petroleum profit tax act, etc.
The amendment to the capital gain tax reads “Subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including- Options, debts, digital assets and incorporeal property generally;”
The Bill explained that the provisions clarify the basis for the taxation of Cryptocurrency and other Digital Assets in line with Government’s policy thrust of enhancing the cross-border and international taxation of growing e-commerce with emerging markets.
It said further that by doing so, Nigeria will join the league of jurisdictions currently taxing digital assets, including the United Kingdom, United States of America, Australia, India, Kenya and South Africa.
The law said that in the computation of chargeable gains, the amount of any loss which accrues to a person on a disposal of any asset shall not be deductible from gains accruing to the persons on a disposal of such asset.
The amendment reads: “In computation of chargeable gains under this Act, the amount of any loss which accrues to a person on the disposal of any asset shall be deductible from gains accruing to the person disposing that asset or against any other chargeable gain from the disposal of other assets from the same asset class; and
“Where the aggregate capital losses by any taxable person in a tax year exceeds the aggregate chargeable gains, such loss may be carried forward to the next year and so on, provided that such losses shall only be set off against chargeable gains arising from the same asset class under this Act.”
The Nation
