Section 122 Nigeria Tax Act 2025

Section 122 of the Nigeria Tax Act 2025 is about Method of calculating relief to be allowed for double taxation. It provides as follows:

(1) Relief from double taxation under an agreement referred to in section 121 of this Act shall be granted in accordance with the provisions of this section and relevant provisions of Nigeria Tax Administration Act, 2025.

(2) The foreign tax paid to a treaty partner in accordance with the agreement, and in respect of income or profits chargeable to income tax in Nigeria may be allowed as a credit against tax payable under this Act.

(3) The Nigerian tax payable in respect of the income or profit which has been charged to tax by a treaty partner shall be reduced by the amount of the credit admissible under the terms of the agreement, provided that credit shall not be allowed to a person who was not a resident of Nigeria during the relevant year of assessment.

(4) Without prejudice to the provisions of subsection (3), the credit to be allowed in subsection (2) shall be the lower of the –
(a) Nigerian tax attributable to the foreign income or profits; and
(b) the amount of tax paid to the treaty partner.

(5) The Nigerian tax under subsection (4)(a) attributable to the foreign income or profits shall be the proportion of the foreign income to total income, multiplied by the Nigerian tax.

(6) In computing the amount of chargeable income or assessable profits, the following shall apply –
(a) deduction shall not be allowed in respect of a foreign tax, whether in respect of the same or any other profits; and
(b) where profits or income chargeable depends on the amount received in Nigeria, the amount shall be increased by the appropriate amount of the foreign tax in respect of the profits.

(7) Any claim for credit shall be made not later than two years after the end of the year of assessment, and in the event of any dispute as to the amount allowable, the claim shall be subject to objection and appeal in like manner as an assessment.

(8) Where the amount of any credit given under the agreement is rendered excessive or insufficient by reason of any adjustment of the amount of any tax
payable in Nigeria or elsewhere, nothing in this Act or Nigeria Tax Administration Act, 2025 limiting the time for the making of assessments or claims for relief shall apply to any assessment or claim to which the adjustment gives rise.

(9) Notwithstanding subsection (8), the assessment or claim shall be made not later than two years from the time when such assessments, adjustments and other determinations have been made, whether in Nigeria or elsewhere, as are material in determining whether any of credit is due.

(10) Where, in accordance with any provision of the agreement, income derived by a resident of Nigeria is exempt from tax under this Act, the exempt income shall be taken into account in determining the rate of tax applicable on the remaining income of such resident.

[/membership]