Section 16 Nigeria Tax Administration Act 2025

Section 16 of the Nigeria Tax Administration Act 2025 is about Estimated returns for upstream petroleum operations. It provides as follows:

(1) A company engaged in petroleum operations, shall submit to the Service an estimated returns of its profits or losses for that accounting period for the purpose of hydrocarbon tax, petroleum profit tax and income tax, as applicable, not later than two months after the commencement of each accounting period.

(2) Any company involved in upstream petroleum operations and subject to hydrocarbon tax or petroleum profits tax, shall apply the accounting periods specific to such companies as contained in this Act.

(3) The estimated tax returns shall and in addition to the particulars requested for the purpose of determining estimated tax payable under Parts I and II of Chapter Three of the Nigeria Tax Act, 2025, contain –
(a) a computation of its estimated revenue, adjusted profit or loss and estimated assessable profits of that period ;

(b) a computation of its estimated revenue from all sources including crude oil, field condensates and liquid natural gas liquids derived from associated and non-associated gas produced upstream of the measurement points ;

(c) a statement of an estimate of amounts to be repaid, refunded, waived or released to it, referred to in sections 68 (2) and 91(2) of the Nigeria Tax Act, 2025 during that period ;

(d) in connection with Parts II and III of the First Schedule to the Nigeria Tax Act, 2025, a schedule showing –
(i) the estimated residues at the end of that period in respect of its assets,
(ii) all estimated qualifying petroleum expenditure incurred by it in that period,

(iii) the values of its assets, estimated by references to the provisions of that schedule, to be disposed of in that period, and
(iv) the allowances due to it under that schedule for that period ;
(e) in connection with the Sixth Schedule to the Nigeria Tax Act, 2025, a schedule showing estimated total production allowance and cost price ratio limits from all its upstream petroleum operations related to crude oil on the two classes of the chargeable profits ;

(f) a computation of its estimated chargeable profits of that period identified in accordance with the Nigeria Tax Act, 2025 ;
(g) a computation of its estimated tax payable for that period ; and

(h) a declaration, that the estimate was made to the best of the ability of the person signing the declaration.

(4) Where, at any time during the accounting period, there is a change in price, cost or volume, the company shall submit further returns on a monthly basis containing its revised estimated tax for such period.

(5) Every return made by a company engaged in upstream petroleum operations related to crude oil and gas in fulfilment of the provisions of this section shall be subject to review and validation by the Service.

(6) Where a company does not provide the estimates required under subsections (1), (2) and (3), the Service may use its power to determine the estimates on the best of judgement basis and impose such judgement on the company.

(7) Notwithstanding the provisions of this section, production allowances under the Sixth Schedule to the Nigeria Tax Act, 2025 shall apply only to hydrocarbon tax under Part I of Chapter Three of the Nigeria Tax Act, 2025.