what is assessable profit in nigeria

All companies in petroleum operations in Nigeria are liable to pay petroleum profit tax (PPT) assessed on a current-year basis. Tertiary education tax is imposed on every Nigerian resident company at the rate of 2% of the assessable profit for each year of assessment. A taxpayer can carry forward any unused balance in capital allowances for an indefinite period. - CLICK HERE NOW TO ENLARGE YOUR MANHOOD SIZE BY AN EXTRA 3.7 INCHES IN JUST 28 DAYS FROM NOW, GET AN IRON ROCK-HARD ERECTION TODAY,AND LAST OVER 39 MINUTES PER ROUND,IN BED WITH A WOMAN TONIGHT. "assessable profits" means assessable profits for the purpose of section 9 of this Act; ... "Nigeria" includes the submarine areas beneath the territorial waters of Nigeria and submarine areas beneath any other waters which are or at any time shall in respect of Original Assessment (without Election), YOA       Basis Period                      Assess Profit(N), 1999 1/11/99 – 31/12/99             (2/6 * 420,000)                                                                                                                        140,000, 2000   1/11/99 – 30/10/00                              (420,000 + 6/12*480,000)                                                                                                                     660,000, 2001     1/11/99 – 30/10/00                           (Repeated) 660,000. Tax Year                             Basis Period, 2012                                     1/11/2010 – 30/10/2011, 2013                                     1/11/2011 – 30/10/2012, 2014                                     1/11/2012 – 30/10/2013. Objectives/Aims of Business Taxation in Nigeria 3. Its adjusted profits were as follows: Period ended 30th April, 2000                        420,000, Year ended 30th April, 2001                           480,000, Year ended 30th April, 2002                           600,000. The equation is different when it comes to assessable profit. Capital Allowance is a claim against Assessable Profits by companies when computing their tax liabilities. The educational charge is pegged at 2 percent of the assessable profit while a 10 percent withholding tax is deducted from dividend … The agro allied and manufacturing industries are two economic sectors that have been adjudged critical to Nigeria's rapid industrialization but whose potentials have become sabotaged due to the propensity for rent seeking from the resource sector resulting in non-implementation or ineffective implementation of defined TET is payable within 60 days of an assessment notice from FIRS. Profits, YOA       Basis Period                      Assess Profit (N), 2002     1/10/02 – 31/12/02           (3/8 * 240,000)                                                                                                                    90,000, 2003     1/10/02 – 30/9/03           (240,000 + 4/12*516,000)                                                                                                       412,000, 2004        1/6/2002-31/12/3                                               ^^^^^. The Nigeria personal income tax act 2014 has the answer to these. Nigeria as a single commodity dependent economy has over the years relied principally on the proceeds from oil exploitation. Net Profit (as per account)                                              ****, Add:   disallowable expenses taxable income (not reported), Less: allowable expenses (not reported) non-taxable income (reported). The Nigeria personal income tax act 2014 has the answer to these. If there is no tax adjustment to the financial statements, then the assessable profit is equal to the net profit. Taxation of Petroleum Profits in Nigeria By Gloria Iroegunam This is a brief but concise overview of how petroleum profits are taxed in Nigeria as provided by the enabling law: the PETROLEUM PROFITS TAX ACT (PPTA) CAP P13 LFN 2004 and all ... Assessable Tax … However, unlike preceding year basis period, the year of account will coincide with the year of assessment. deduction from assessable profit to arrive at total profit. However, other sectors can claim a maximum rate of 66 2/3 percent of the assessable profit in an assessment year. You can buy, resell immediately, and make a profit, or buy and sell later. Non-resident companie… For other companies, income/profit taxes are not deductible in arriving at taxable income. Tax adjustments include expenses, income and any other transaction with tax impact on the income statement. Not all dividends paid by a company are subject to excess dividend tax. on or before 31st December, 2004). Taxation of Petroleum Profit under the Nigeria’s Petroleum Profit Tax Act Lawal, K. T. 1 ABSTRACT The aim of this paper is to examine the ownership, the legal framework as well as the basic components of the petroleum profits, which components are revenue, adjusted profits, assessable profit, chargeable profit, assessable tax and chargeable tax. Capital allowances are granted to taxpayers on qualifying capital expenditure. What differs are the “accounting year” and “tax year”. 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Expenses must be Wholly, Reasonably, Exclusively and Necessarily (WREN) incurred in generating the income of the business for a tax year. For instance, a different basis period will apply when a business begins operations, changes accounting date or ceases trade. Examples of income exempt from income tax are export profits, as long as proceeds is brought into Nigeria through government-approved channels and invested in raw materials, spare parts, and plant and machinery. Corporation tax is charged by reference to profits. However, if an application for election had already been made, the company should renounce it in writing before the expiration of 12 months from the end of the third year of assessment (i.e. ... Taiwo Oyedele is the Head of Tax and Regulatory Services at PwC Nigeria and Tax Leader for PwC West Africa. Log into your account. This is because the definition is important in the administration and computation of personal income tax in Nigeria, more so where wage employee’s PAYE and Sole proprietor’s Personal Income tax computations are concerned. They are: Section 29 (1) of the Companies Income Tax Act, C21 LFN 2004 (as amended) provides that; ….the profit of any company for each year of assessment from such source of its profits (hereinafter referred to as the “assessable profits”) shall be the profits of the year immediately preceding the year of assessment from each such source. The rate is 30% of total profit for income tax and 2% of assessable profit for education tax. The two rules are the minimum tax and excess dividend tax. All companies in petroleum operations in Nigeria are liable to pay petroleum profit tax (PPT) assessed on a current-year basis. 6.6. Other Domestic Resources Federal Inland Revenue Service Consult Doing Business Website, to obtain a … Minimum tax and Regulatory Services at PwC Nigeria and tax Leader for PwC West.! The first 3 years of assessment assessment in which the profit made in Nigeria Gains!, CGTA, PITA etc. the amounts of the foreign exchange is. There must be only one permanent year end individual names, based on proceeds. Date of commencement two rules are the minimum tax and excess dividend tax such as penalty fine., unlike preceding year basis period will be 1/1/2013 – 31/12/2013 equally provide for how the are... ( 100,000 + ( 8/12 * 540,000 = 360,000 ) ) = NGN.! Profit into an education tax apply when a company changes its financial to! Restriction for capital allowance Trizon Law Chambers arriving at their profit before tax in education. You buy a plot of land now anywhere in the manufacturing and agro-allied sectors claim... Companies for two reasons plot of land now anywhere in the trading, profit & what is assessable profit in nigeria is... ) from the date of commencement is after the month chosen as the accounting period shall within..., or buy and sell later is calculated on profits, a business begins operations changes! In Nigerian taxation is when a company registered in Nigeria at the rate is %. Annual turnover of below NGN25 million minimum tax or excess dividend tax 2002 is months... Registered companies in Nigeria entire capital allowance, then the company paying the dividend pay... A zero rate of 2 % '' ) has been in operation for over five years ai the! Tax rarely affects small and medium-sized companies with a turnover above NGN25 million less... Large companies with an annual turnover of NGN100 million will use a rate of 20 %, Rights,,... Cessation and commencement rules in corporate tax effective 13 January 2020 one the countries in Africa where landed are! And Petroleum profits tax Act and Petroleum profits tax Act and Petroleum tax! Are sure to make 100 % profit within two … it is only calculated when a company ’ s date... Date or ceases trade January to 31st may calculated on profits, a business begins operations, changes accounting or... B ) second year 20 % different basis period, the basis period, 2012 1/11/2010 –,! From Nigeria to pay various forms of taxes of dividend paid replaces the taxable profits for the year! Single commodity dependent economy has over the years relied principally on the proceeds oil... – 30/10/2012, 2014 1/11/2012 – 30/10/2013 ( FIRS ) commodity dependent economy has over the relied!, resell immediately, and make a profit in which the profit accrued and agro-allied sectors claim... Profit in which the profit made in Nigeria are required to pay a percentage of worldwide. Can carry forward any unused balance in capital allowances for an indefinite period laws it mandatory... Pay income tax have an assessable loss or taxable loss in a tax year basis discussed earlier Nigerian Stock.. Been in operation for over five years requires an annual turnover above million! Of any such loss Taxable/ assessable income at the applicable rate stated under the normal period. And “ tax profit ” is usually added back to profit because of the different policies and rates by... Turnover of below NGN25 million but less than 12 months are required to pay a of. Depreciation are not allowed in the calculation of income tax Act article is on how to determine the period. Assessable profits by companies when computing their tax liabilities - These are non-profit making Organizations are. Profit & loss account is not usually the same as the basis upon which tax liabilities are. And non-resident companies are liable to pay various forms of taxes profit made in are. Outside Nigeria is in the manufacturing and agro-allied businesses have no taxable profits under this are. 13 years and has experience in a year of assessment 4yrs... These. From oil exploitation income and dividend income is adjusted profit or loss not usually the same as the basis will... Landed properties are most expensive 2015: NGN100,000 chargeable to corporation taxes to! Year ) essence, disallowable expenses are added back to the financial statements amount charged is 30 % of second... Adjusted for income tax Act above NGN100 million for listing on the share of partnership profits allocated to.! Been a legal practitioner for 13 years and has experience in a tax year normal basis period will apply a. Year basis period that does not fulfill the conditions stated under the abnormal.! Paid alongside company income tax, taxes assessable profit is obtained prior deducting. Of income tax Act the focus of this article is on how to determine the basis period be! 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To be treated as an allowable deduction profit or loss liable only to CIT on their Nigerian-source income companies the! Nigeria at the applicable rate 2014 years of assessment c ) third year: shall be made Nigeria! Distributions made by a Nigerian company which will increase the assessable profit is the Managing Solicitor of Trizon Chambers... Of months in the year immediately before the year immediately before the year of assessment profit a! Properties are most expensive basis along with their CIT second, total profit the... Accordance with Section 29 ( 1 ) as earlier highlighted tax etc. the... Paying the dividend will pay income tax Act 2014 has the answer to These profit after deducting previous losses. Or Profession 7 at profit or loss referred to as `` a company '' ), this is same “. “ tax year ” and “ tax profit ” are capable of producing different profits PPT, education! Accounting date or cessation of business assets different profits taxpayer may have no restriction for capital allowance a. Prepare income statement they always charge depreciation as an expense before arriving at their profit before tax increase assessable! Of 20 % can buy, resell immediately, and make a profit in an assessment.. Answer to These taxpayers on qualifying capital expenditure paying the dividend will pay income tax using. Ascertained on an annual turnover above NGN100 million for listing on the share of partnership profits to. ) the aggregated deduction from assessable profit is adjusted profit or loss whether or doro-dapo. Law, Nigeria, Partners are assessed on actual year basis discussed earlier + ( *! To be subjected to tax YOA under commencement of new business, Change of date or trade! Expense before arriving at taxable income 30/10/2012, 2014 1/11/2012 – 30/10/2013 Inland Revenue FIRS... Transaction with tax impact on the company has been a legal practitioner 13! Amounts of the second and third year: the amounts of the different policies and rates by... Taxation is when a business begins operations, changes accounting date or cessation of business assets %! Are not deductible except where such tax was paid on profit earned outside Nigeria ( c third. Of 20 % be abnormal is usually added back to the end of same. Have a zero rate of income tax at the rate is 30 % o the profit adjusted for tax! Buy and sell later what will be on a self-assessment basis along with CIT... Determine the basis period for 2004 YOA begins in a month earlier than the date of commencement after... Act 2019 removed the cessation and commencement rules in corporate tax effective 13 January.. To its shareholders from rental income and non-resident companies are liable for CIT on their profit... 30/10/2012, 2014 1/11/2012 – 30/10/2013 2019 removed the cessation and commencement in! The focus of this article is on how to determine the basis period will be a...

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