Section 68 Nigeria Tax Act 2025

Section 68 of the Nigeria Tax Act 2025 is about Allowable deductions. It provides as follows:

(1) In computing the adjusted profit of a company engaged in upstream petroleum operations related to crude oil for any accounting period, there shall be deducted expenses wholly and exclusively incurred during that period for the following –

(a) rents incurred by the company for the period pursuant to a petroleum mining lease or petroleum prospecting licence;

(b) all royalties incurred by the company during that period in respect of crude oil and associated gas and where payments to the Federation Account from a petroleum mining lease is related to production sharing, profit sharing, risk service contracts or other contractual features under a model contract and the company has incurred liability for such payments;

(c) expenses directly incurred for repair of plant, machinery or fixtures employed for the purpose of carrying on production activities or for the renewal, repair or alteration of production implement, utensils or articles so employed;

(d) an expenditure, tangible or intangible directly incurred in connection with the drilling of the first exploration well and the first two appraisal wells in the same field, whether the wells are productive or not, provided that subsequent exploration wells, appraisal wells and other wells shall be treated as qualifying drilling expenditure under Part II of the First Schedule to this Act and where a deduction may be given under this section in respect of any such expenditure, that expenditure shall not be treated as qualifying drilling expenditure for the purpose of Part II of First Schedule to this Act ;

(e) any amount contributed to a fund, scheme or arrangement relating to abandonment plan approved by the Commission for the purpose of decommissioning and abandonment, provided that the surplus or residue of the
fund shall be subject to tax under this Part at the end of life of the field, where
such surplus is returned to the lessee ;

(f) all sums incurred by the company to the Federal Government or any State or Local Government Council by way of levies, stamp duties and fees;

(g) costs of gas reinjection wells, which are re-injecting natural gas that otherwise would be flared, subject to ratification by the Commission; and

(h) any amount contributed to any fund, scheme or arrangement approved
by the Commission pursuant to the establishment of host communities’ development trusts under Chapter 3 of the Petroleum Industry Act, Environmental Remediation Fund, Niger Delta Development Commission and other similar contributions.

(2) Liability waived, released or recovered shall be treated under this Part in accordance with section 193 of this Act.

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