Nigeria Court: Minister's Approval Required for Deductibility of Payments on Gas Flare

The Federal High Court of Nigeria recently disregarded the judgment of the Lagos division of the Tax Appeal Tribunal (TAT) in Federal Inland Revenue Service v. Mobil Producing Nigeria Unlimited on the tax deductibility of payments made for gas flaring without the approval of the Minister of Petroleu...

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Bibliographic Details
Published in:Journal of International Taxation 2018-09, Vol.29 (9), p.8-9
Main Authors: Mattern, Silke, Olaogun, Dele, Adeniji, Abass
Format: Article
Language:English
Subjects:
Corporate income tax
Federal court decisions
International taxation
Oil reserves
State court decisions
Tax deductions
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Summary:The Federal High Court of Nigeria recently disregarded the judgment of the Lagos division of the Tax Appeal Tribunal (TAT) in Federal Inland Revenue Service v. Mobil Producing Nigeria Unlimited on the tax deductibility of payments made for gas flaring without the approval of the Minister of Petroleum Resources. The TAT had held on 17 March 2015 that the Petroleum Profits Tax Act and Associated Gas Re-injection Act do not require expressly that a company obtain a gas flare certificate before the expense incurred can be tax deductible. Based on the court's ruling, payments made in respect of gas flaring without a certificate or written form of approval from the Minister are not deductible for petroleum profits tax purposes. Accordingly, unless the case is further appealed to the Court of Appeals or Supreme Court, taxpayers are required to obtain an approval and certificate from the Minister prior to claiming a tax deduction for the expenses incurred on gas flaring.
ISSN:1049-6378