Published On: Fri, Jul 5th, 2013

N’Delta States May no Longer Enjoy 13% Derivation –NEITI Chairman

NEITE Chairman, Ledum Mitee

LAGOS JULY 5TH (URHOBOTODAY)-The Chairman, Nigeria Extractive Industries Transparency Initiative, Mr. Ledum Mitee, has said the Niger Delta region will no longer enjoy the 13 per cent derivation that accrues from Company Income Tax if the current Petroleum Profit Tax is replaced with the Nigerian Hydrocarbon Tax as proposed in the Petroleum Industries Bill.
He also said the volume of crude oil production might be difficult to ascertain except a new royalty provision was included in the PIB.
Mitee made these observations in a paper entitled, ‘Some reflections on the Petroleum Industry Bill and the Niger Delta’, which he delivered at a workshop organised by AFROFIT Consult in Calabar, Cross River State on Thursday.
He said whereas NHT would be subject to the 13 per cent derivation, the CIT would not, adding that this was one of the implications of the proposed changes to the derivation principle.
Mitee said, “Section 60 of the PPT Act provides that any dividend paid out by a company from profits on which PPT has been paid is exempted from further Nigerian tax. This provision is retained in Section 350 of the PIB. Hence, dividends paid out of profits that have been subjected to NHT will not be liable to withholding tax, personal income tax, CIT and other Nigerian taxes.
“Consequently, the restriction on effects of Personal Income Tax and other Acts of dividends will reduce the revenue under 13 per cent derivation, and which will have direct bearing on the interests of the Niger Delta states.”
According to him, Section 304 [1a] states that the NHT will be calculated based on proceeds from sales of oil, gas, condensates and bitumen, a development that “leaves the door open in principle for transfer pricing by exporting crude oil at artificially low prices. Subsequently, Section 315 builds in some protection for the valuation of crude oil and condensates, although rather weakly.”
Source: Punch

About the Author


Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Konga Verified Blogger

Konga Verified Blogger