3.1: Agriculture/Agro-Allied
Ministry: Federal Ministry of Agriculture and Rural Development
Enhanced capital allowance (tax depreciation) regime

  • 95% capital allowance is enjoyed in the year a qualifying expenditure is incurred pursuant to Paragraph 24 Table 1 & 2 Second Schedule of CITA
  • Companies engaged  in  wholly  agricultural  activities  are  entitled  to  unrestricted capital  allowances  pursuant  to

Paragraph 24 (7) CITA

  • Companies engaged in wholly agricultural activities are entitled to carry forward unutilized capital allowances indefinitely.

Administering Agency:

  • Federal Inland Revenue Service

Agricultural credit guarantee scheme fund: loan guarantee of up to 75%
This fund provides guarantees on the payment of interest and principal in respect of loans granted by any bank for certain agricultural purposes with the aim of increasing the level of bank credit to the agricultural sector.

  Administering Agencies: Eligibility:
  –  Nigeria Incentive-Based Risk Sharing Applicants must apply for the loan for purposes connected with:
  System for Agricultural Lending i. Establishment or management of plantation for the production of rubber, oil palm, cocoa, coffee, tea and similar crops
  –  Commercial banks    
    ii. The cultivation or production of cereal crops, tubers and fruits of all kinds, cotton,beans, groundnuts, sheanuts, beniseed, vegetables, pineapples, bananas and plantains
       
    iii. Animal husbandry
       

 

Exemption from minimum Corporate Income Tax
Section 33(3) a CITA, exempts the income of a company carrying on agricultural trade from payment of minimum tax.

Administering Agency:

  • Federal Inland Revenue Service

Indefinite carry forward of losses
Section 31(3) CITA allows companies engaged in agricultural trade or business to carry forward their losses indefinitely.

Administering Agency:

  • Federal Inland Revenue Service

 

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3.2:   SOLID MINERALS

Ministry: Federal Ministry of Mines and Steel Development

Exemption from Companies Income Tax
Section 36 CITA provides that a new company going into the mining of solid minerals shall be exempt from tax for the first three years of its operation.

Administering Agency:

  • Federal Inland Revenue Service

95% accelerated capital allowance
Second Schedule CITA provides accelerated capital allowance at 95% of qualified capital expenditure on Mining in the first year of use of the asset.

  Administering Agency: Eligibility:
  –  Federal Inland Revenue Service All companies that incur qualifying capital expenditure on mining

 

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3.3:   MANUFACTURING

Ministry: Federal Ministry of Industry, Trade & Investment

Interest drawback program fund for cassava processing
60% repayment of interest paid by those who borrow from banks under ACGS for the purpose of cassava production and processing

  Administering Agencies: Eligibility:
  – Nigeria Incentive-Based Risk Sharing i. Certified investor business plan by NIRSAL
    System for Agricultural Lending ii. Ability to repay back the loan granted under ACGS.
  – Central Bank of Nigeria    
         

 

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3.4:   TOURISM/HOSPITALITY

Ministry: Federal Ministry of Information and Culture

Sector Regulator: Nigerian Tourism Development Corporation

25% of income in convertible currencies exempted from tax
Section 37 CITA provides that such income must be generated from tourists and be put in a reserved fund to be utilized within 5 years for the building and expansion of new hotels, conference centres and new facilities for the purpose of tourism development.

Administering Agency:

  • Federal Inland Revenue Service

 

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3.5:     OIL & GAS

Ministry: Federal Ministry of Petroleum Resources

Sector Regulator: Department of Petroleum Resources

Graduated royalty rates approved for oil companies
Graduated royalty rates approved for oil companies

  • On shore production – 20%
  • Production in territorial waters and continental shelf areas up to 100 meters Water depth – 18.5%
  • Production in territorial waters of continental shelf areas beyond 100 meters – 16.67%
  • For production sharing contract for deep offshore operation, the royalty rates are:
Up to 200 metres water depth 16.67% 800 – 1,000 metres water depth 4%
201 – 500 metres water depth 12% Above 1,000 metres water depth 0%
501 – 800 metres water depth 8%    

Petroleum Act Section 5 of Deep Offshore and Inland Basin Production Sharing Contracts Act CAP. D3 LFN 2004 as amended provides royalty rates payable in respect of deep offshore contracts

Administering Agency:

  • Federal Inland Revenue Service

 

Investment tax credit allowance
Section 22 PPTA: Investment tax credit allowance is granted in accordance with the provisions of the production sharing contract. The investment tax credit rate applicable to the contract area is 50% of chargeable profit for the duration of the production sharing contract.

Administering Agency:

  • Federal Inland Revenue Service

Eligibility

  1. The incentive is available to all the crude oil producing companies which signed the production sharing contract agreements with the NNPC (for deep offshore oil exploration and production) in 1993. It commenced in 1999.
  • The companies will be entitled to this allowance throughout the duration of the production sharing contract.
  • In computing the tax payable, the investment tax credit shall be applicable in full to petroleum operations in the contract area such that the chargeable tax is the amount of the assessable tax less the investment tax credit.
  • The chargeable tax shall be split between the NNPC and the crude oil producing company in accordance with the proportion of the percentage of profit oil split.

Allowable deductions
Chargeable tax is the amount of tax paid after deduction of allowable deductions made pursuant to the provisions of Section 10 PPTA. Allowable deductions are treated as charges against income and not as tax offsets and are wholly incurred in the process of petroleum operations.

    Administering Agency: Eligibility:    
    –  Federal Inland Revenue Service Allowable deductions include the following:    
      i. Rent incurred by the IOC for the period in respect of land or buildings occupied under an oil prospecting license or an oil mining lease for disturbance of surface tights or for any other like disturbance.  
           
             
      ii. All non-productive rents, the liability for which was incurred by the IOC during the period.  
             
      iii. All royalties, the liability for which was incurred by the company during that period in respect of natural gas sold and actually delivered to the NNPC, or sold to any other buyer or customer or disposed of any other commercial manner.  
           
             
      iv. All royalties, the liability for which was incurred by the company during that period in respect of crude oil or of casing head petroleum spirit won in Nigeria.  
             
      v. All sums, the liability for which was incurred by the IOC to the Federal Government of Nigeria during that period by way of customs or excise duty or other like charge levied in respect of machineries, equipment and goods used in the company’s petroleum operation.  
           
           
      vi. Sums incurred by way of interest upon any money borrowed by such company, where the board is satisfied that the interest was payable in capital employed in carrying on its petroleum operations.