Capital allowance claim

The crisis of dwindling revenue from crude oil has pushed emphasis on maximizing collection of non-oil revenue from mere lip service to center stage in the financial/revenue planning by the government of Nigeria. The most significant non-oil revenue source is the taxes of individuals, partnerships, companies and other forms of taxpayers.

The structure of Nigeria's tax laws reflects a level of quid pro quo by Government. The provisions, as exacting as they are, show that it is not only about what must accrue to government but also what government is prepared to give up to encourage taxpayers in the certain obligation to pay tax.

Thus, the tax codes allow tax payers to claim certain benefits in relation to their business investments in the country as well as reduce the certain tax burdens which they would have borne, were such provisions not available. One of such provisions is the right of the taxpayer to claim capital allowance on qualifying capital expenditures as provided in the Companies Income Tax Act (CITA), Personal Income Tax Act (PITA) and Petroleum Profits Tax Act.

The Second Schedule to CITA sets the legal basis for the claim of capital allowances by companies. Specifically, Paragraph 24 of the Schedule makes provisions for the manner in which capital allowances and charges can be made. Subparagraph 2 of Paragraph 24, provides for capital allowance to be made to a Company, from the remainder of its assessable profits for the year of assessment for which the allowance is due.
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