The Ministry of Petroleum Resources has released a draft fiscal policy for Nigeria’s petroleum industry. This is a fall out of the Ministry’s roadmap tagged “7 Big Wins” for the petroleum industry which was launched last year (Deloitte Tax Alert – FG launches new roadmap for Oil and Gas Sector).
The release is in line with the objective of addressing the policy and regulation issues with a view to gaining a robust fiscal policy instrument for the industry, as part of the 7 major focus of the roadmap.
The purpose of the policy is to provide a fiscal framework that will guide the planning and development of petroleum activities in an efficient manner and ultimately lead to the socioeconomic development of Nigeria. Federal Government is also interested in increasing revenue generated from this sector of the economy.
The policy covers all sectors of the petroleum industry – upstream, midstream and downstream, and includes all petroleum related products.
Highlights of the policy document include:
- Detailed outline of FGN’s policy, vision and purpose for Nigeria’s petroleum fiscal resources
- Short, medium and long-term goals for fiscal development
- Strategies to be pursued to ensure the successful implementation of the policy
The policy is still a work in progress and therefore open to consultation with stakeholders. If gazetted and implemented, the policy will bring about various tax implications e.g.:
- Changes to Petroleum Profits Tax (PPT) by introducing Nigerian Hydrocarbon Tax (NHT) which is considered to be a simplified form of PPT
- Companies Income Tax (CIT) will be applicable to all petroleum companies (not only downstream)
- Reduction of deductible items for NHT purposes
- Elimination of upstream investment allowance
- Increased collection of royalties; etc.
Please be on the lookout for our newsletter on this subject where we will analyse in detail, the proposed provisions in the policy. A copy of the policy can be accessed HERE.