Tax experts dissect issues in Economic Stabilisation Bill

• Urge Nigerians to contribute during public hearing

By Henry Uche

Tax experts have looked into the intricacy of the taxation of income from petroleum operations under the Nigeria Tax Bill, 2024, saying that an in-depth understanding of the bill by Nigerians would go a long way in achieving the collective desired goal.

At a webinar put together by the Chartered Institute of Taxation of Nigeria (CITN), the discourse, which focused on Chapter Three of the Nigerian Tax Bill, 2024, encouraged lawmakers to be very careful while discharging their legislative responsibilities, particularly lawmaking. The reason being that, an ill-conceived and poorly communicated legislation and reforms could repel investors and cause chaos in the country, while stable and progressive laws, no doubt, result in a viable economy.

The lead paper presenter, Alhaji Azeez Alatoye, highlighted the importance of tax planning in line with regulatory standards as well as carrying out tax audits and administration in the oil and gas sector for effective management of resources.

Alatoye who is the Dean, Extractive Industries Taxation Faculty at CITN, maintained that the Economic Stabilisation Bill, 2024, alongside the provisions of the Petroleum Industry Act (PIA) 2021, and the Petroleum Profits Tax Act (PPTA), and Deep Offshore Inland Basing (PSC), all represents a significant shift in the taxation framework for upstream petroleum operations in Nigeria. More so, the bill introduces reforms aimed at increasing government revenue, simplifying compliance, and incentivising investment in the petroleum sector.

The tax expert recommended that tax practitioners must stay informed and compliant, optimise possible deductions, and maintain accurate records. “Companies operating in the upstream sector should monitor updates to the Economic Stabilisation Bill, ensuring that their tax practices align with new provisions.

“Businesses should leverage allowable deductions, such as decommissioning contributions and gas re-injection costs, to minimise tax liabilities under both HT and PPT. Moreover, proper documentation of expenses, apportionment methodologies, and terrain-based operations will be critical for compliance, especially under the new consolidation rules.”

He called for tax planning strategies with the help of tax consultants to assess the impact of CPR limits and the revised amortisation periods for capital allowances, enabling them to optimise their tax positions.

“The reforms proposed to be introduced by the Economic Stabilisation Bill, combined with existing tax structures under the PIA and PPTA, DOIBPSC, aim to strike a balance between revenue generation for the government and investment incentives for operators. However, successful implementation will depend on clarity in legislation, consistent regulatory enforcement, and effective stakeholder engagement,,” he affirmed.

On his part, the Assistant Director, Oil and Gas Department at Federal Inland Revenue Services (FIRS), who spoke from the administrative point of view, assured that FIRS has never been afraid of tax planning but was concerned about the thin blue line between aggressive tax planning and tax evasion.

“At FIRS we are not too scared of tax planning per se; we want to simplify the whole process. We are mindful of the fact that there is a thin blur line between aggressive tax planning and tax evasion; even though one is legal, the other one is illegal. We are mindful that there is a level of aggressive tax planning you would go into; you are already in the realm of tax evasion. We want to see voluntary compliance and educate taxpayers on how to pay their taxes properly and rightly,” he added.