ASCERTAINMENT OF CHARGEABLE PROFIT IN THE ADMINISTRATION OF PETROLEUM PROFIT TAX IN NIGERIA

Chargeable Profit in Petroleum Taxation

Abstract

The primary goal of the petroleum profit tax is to ensure that Nigeria's government gains the maximum possible advantage from its natural resources. This study focuses on looking into the rules and regulations for figuring out taxable profits and taxes in managing the petroleum profit tax as outlined in the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act, 2025. It seeks to identify key structural, legal, and practical problems and propose adjustments that can enhance efficiency, fairness, and transparency. This paper explores the functions of taxes, the process of filing returns to the tax authority, the data required for tax purposes, the calculation of taxable profits related to the petroleum profit tax, and how the petroleum profit tax is managed in Nigeria using a method based on doctrinal research. The study finds out that in reality, there are still difficulties in calculating and determining the petroleum profit tax. These complications frequently result in disagreements between tax authorities and petroleum operators, which can lead to litigation, revenue leaks, and a lack of confidence among players. Therefore, in order to guarantee that oil corporations pay their fair share of taxes, the paper suggests that chargeable profits be accurately calculated and determined. It is also advised that the Act be re-examined further to provide institutional support for taxation and chargeable profit calculation. By doing this, the Nigeria Revenue Service will have access to data on the cost-related operations of every company involved in petroleum operations.