Abstract
Petroleum Profit Tax is a major source of revenue for the Federal Government of Nigeria to meet its statutory
obligations of ensuring the economic development of Nigeria. It assists the government to achieve the country’s
macroeconomic objective in the areas of fiscal and monetary policies. However, it has been observed that non provision
of corporate social responsibilities in the communities where there is extraction of crude oil result into
constant destruction of production installations, and hindrance to production; tax avoidance and evasion d poor
tax administration, and weak fiscal policy have been negating the increase in tax income generated.
Nigeria’s economy is totally dependent on oil. The revenue from oil accounts for over 85% of the entire revenue
of Government and about 95% of foreign earnings. The oil boom has led to more revenue through tax and
royalties. It concludes that when the proposed Petroleum Industry Bill, currently under review at the National
Assembly is eventually passed into law, it is believed that it will bring about the much desired development in
the sector.
The main objective of this paper is to assess the relationship between petroleum profit tax and economic
development of Nigeria for the enhancement of the welfare of the citizens. And to also paper is to examine the
ownership, the legal framework as well as the basic components of the petroleum profits, which components are
revenue, adjusted profits, assessable profit, chargeable profit, assessable tax and chargeable tax. This article
focuses on the assessment of the petroleum profit tax under the Petroleum Profit Tax Act, Cap P 13, Laws of
Federation of Nigeria, 2004 as well as judicial authorities regarding same.
Primary and secondary data were used to collect the research data, while chi-square and multiple regression
statistical models were used to analyze the results of the field work. The findings reveal that there is a very
strong relationship between petroleum profit tax and economic development of Nigeria, tax avoidance and
evasion are major hindrance to income growth in this sector, poor tax administration is a problem to
effectiveness and efficiency of this source of income, and lack of corporate social responsibilities is causing
unrest in the crude oil production zone.
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