Nigeria: Tax holiday invalid; taxpayer failed to obtain valid certification of gas production

A decision concerning a taxpayer’s claim for a five-year tax holiday to obtain valid certification of gas production

Tax holiday invalid; taxpayer failed to obtain valid certification of gas production

The Tax Appeal Tribunal (Lagos Zone) in a November 2021 decision held that a taxpayer’s claim for a five-year tax holiday (claimed pursuant to a statutory provision for companies engaged in downstream gas utilization) was invalid because the taxpayer had failed to obtain a valid certification of the date of gas production.

The case is: Seplat Petroleum Development Company Plc v. Federal Inland Revenue Service


The taxpayer in 2015 commissioned a natural gas plant for downstream gas utilization purposes.

Subsequently, the Ministry of Petroleum Resources (through the Department of Petroleum Resources) in April 2015 issued a letter to the taxpayer directing it to introduce hydrocarbon to the new gas plant following a satisfactory completion of mechanical and pre-commissioning activities of the gas plant. Thereafter, the taxpayer (on the basis that the letter had satisfied the condition for the tax holiday) adopted a production date of 13 May 2015, and claimed the related tax incentives.

The tax authority disagreed and issued assessments for 2016 and 2019 years of assessment, following two desk reviews of the tax returns for the relevant years. The taxpayer objected, asserting that with the tax holidays for the years under review, it had no tax obligations. The taxpayer asserted it was automatically entitled to the tax relief for the initial period of three years and an extension for an additional two years.

The tribunal upheld the tax authority’s decision to invalidate the tax holiday incentive claimed by the taxpayer, finding that the taxpayer had failed to obtain a valid certificate of the date of its gas production.

Read a November 2021 report prepared by the KPMG member firm in Nigeria


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