Section 10

(1) Where a Nigerian company controlled by not more than Certain
five individuals has not distributed to its shareholders as dividend, profits undistributed
profits may
made in any period for which accounts have been made up by such
be treated as
company, the Service may direct that the proportion of the profits of the
distributed
company, which could have been distributed without detriment to the
company's business, be construed as distributed.
(2) The gross amount of profits construed as distributed under the
provisions of subsection (1) shall constitute a taxable income in the hand
of individual shareholders of the company in proportion to their
shareholdings in the ordinary capital of the company on the day of the
deemed distribution.
A 398 2025 No. 7 Nigeria Tax Act, 2025
(3) Any direction by the Service under this section shall be made in writing,
and be served on the company, and shall specify the –
(a) day to be taken for the purposes of this section;
(b) gross amount of those profits so deemed to be distributed;
(c) rate applied for the deduction at source, being the rate prescribed by
Nigeria Tax Administration Act, 2025; and
(d) net amount after the deduction at source.
(4) For the purposes of this section, the Service may give notice to any
company, which it has reason to believe is controlled by not more than five
individuals, requiring it to supply, within such time as contained in such notice,
full particulars of its shareholders.
(5) In the case of a limited liability partnership, all the profits of the
partnership shall be deemed as distributed, and taxable income, proportion-
ately, in the hands of the respective partners.
(6) Any direction by the Service under this section with respect to the
profits of any accounting period of a company shall be made not later than
three years after the receipt by the Service of the duly audited accounts of the
company for that period.
(7) A company in respect of which a direction is made under this section,
shall have a right of appeal in accordance with Chapter Two of Nigeria Tax
Administration Act, 2025.