Royalties are not specifically mentioned in the bill, but it gives the minister the right to change the system. A new system currently under examination makes the calculation of the royalty more complex. #NASSPassPIBNow
Prior to the bill, royalties were calculated to encourage deep-water exploration and the royalty rate was based simply on the position of the activity #NASSPassPIBNow
The scheme now under consideration combines location with both volumes and price, meaning that with higher rates of production per day, will warrant higher rates of taxation. #NASSPassPIBNow
This is a drastic change to the royalty regime that will lead to Nigeria being perceived as one of the least profitable regions to export oil and therefore globally uncompetitive. #NASSPassPIBNow
According to SDN independent analysis, the changes in the royalty and taxation regime will increase income to the Federal Government by approximately 7% per annum in the short term.
The two new taxes – NHT and CIT combined – produce less revenue than the old Petroleum Profits Tax (PPT). It is the royalty provision that will increase the level of revenue if the PIB is passed. #NASSPassPIBNow
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