Section 92

(1) In computing the adjusted profit of a company for an accounting
allowed period from its petroleum operations, there shall be deducted all outgoings and
expenses wholly and exclusively incurred, during the period by the company
for the purpose of its operations, as follows –
(a) rents incurred by the company for that period in respect of land or
buildings occupied under an oil prospecting licence or an oil mining lease for
disturbance of surface rights or for any other like disturbance;
(b) all non-productive rents incurred by the company during that period;
(c) all royalties incurred by the company during that period in respect of
natural gas sold and actually delivered to the Nigerian National Petroleum
Company Limited, or sold to any other buyer or customer or disposed in any
other commercial manner;
(d) all royalties incurred by the company during the period in respect of
crude oil or of casinghead petroleum spirit won in Nigeria;
(e) customs or excise duty or other like charges in respect of machineries,
equipment and goods used in the company's petroleum operation incurred
by the company to the Federal Government of Nigeria during the period;
(f) any expense incurred for repair of premises, plant machinery, or fixtures
employed for the purpose of carrying on petroleum operations, or for the
renewal, repair or alteration of any implement, utensils or articles employed;
Third (g) interest incurred on money borrowed by such company where the
Schedule Service is satisfied that the interest was payable on capital employed in
carrying on its petroleum operations subject to the provisions of the Third
Schedule to this Act and the Transfer Pricing Regulations;
(h) any expenditure being intangible drilling costs directly incurred in
connection with drilling and appraisal of a development well;
First (i) any expenditure (tangible or intangible) directly incurred in connection
Schedule with the drilling of an exploration well and the next two appraisal wells in
the same field whether the wells are productive or not, provided that where
a deduction is made under this section in respect of any such expenditure,
that expenditure shall not be treated as qualifying drilling expenditure for the
purpose of Part III of the First Schedule to this Act ;
Act No. 2, (j) any contributions to pension, provident or other society, scheme or
fund, which may be approved, under the Pensions Reform Act, provided
Nigeria Tax Act, 2025 2025 No. 7 A 447
that the sum received by or the value of any benefit obtained by such
company, from any approved pension, provident or other society, scheme or
fund, in any accounting period of that company shall, for the purpose of
subsection (1)(c) of section 90 of this Act, be treated as income of the
company for that accounting period;
(k) customs and excise duties, stamp duties, or any other rate, fee or
other like charges, other than any tax on income, incurred by the company
during the period to the Federal Government, a State or Local Government;
(l) any amount contributed to a fund, scheme or arrangement approved
by the Commission for the purpose of decommissioning and abandonment,
subject to the production of the statement of account of the Decommissioning
and Abandonment Fund :
Provided that the surplus or residue of the fund after decommissioning and
abandonment of the field shall be subject to tax under this Part;
(m) debts directly incurred to the company and proved to the satisfaction
of the Service to have become bad or doubtful in the accounting period for
which the adjusted profits is being ascertained, notwithstanding that such
bad or doubtful debts were due and payable prior to the commencement of
that period, provided that –
(i) the debt was included as a profit from petroleum operations in the
accounting period in which they were incurred or advances made in the
normal course of carrying on petroleum operations not being advances
on account of any item under section 97 of this Act,
(ii) the deduction to be made in respect of a doubtful debt shall not
exceed that portion of the debt which is proved to have become doubtful
during that accounting period, and shall not include any amount deducted
under the provisions of this paragraph in determining the adjusted profit
of a previous accounting period, and
(iii) all sums recovered by the company during that accounting period
on account of amounts previously deducted in respect of bad or doubtful
debts shall be treated as income of the company for that period;
(n) development levy paid under section 59 of this Act ; and
(o) such other deductions as may be prescribed by any rule made under
this Part.
(2) Liability waived, released or recovered shall be treated under this
Part in accordance with section 193 of this Act.