Airline Taxation – NBC Institute

AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)

Tax computation for Obi Airlines Limited operating in Ethiopia, including Total Profits and tax liabilities in Nigeria for income sourced from Nigeria.

Question

Chief Bonny Chizaram is the Chairman/CEO of Chizaram group of companies. The conglomerate operates in several states of Nigeria, with business interests in supply of building materials, transport, and banking.

In 2012, under the Chairman’s directive, the group decided to diversify its business into some African countries by establishing Obi Airlines Limited, incorporated in Ethiopia.

On May 25, 2016, as Chief Chizaram was in the executive lounge of Murtala Mohammed International Airport, Lagos, awaiting departure, he met his long-time friend and business colleague, Chief Roger Menkiti, who is also an entrepreneur.

During their discussion, Chief Menkiti expressed interest in understanding the benefits of investing in Ethiopia, with concerns about Companies Income Tax and Tertiary Education Tax payable in Nigeria if he started an airline business in Ethiopia.

The financial results of Obi Airlines Limited for the year ended December 31, 2015, are as follows:

Description	Amount (₦)
Income from passenger flights on other routes	213,668,750
Income from cargo loaded into aircraft on other routes	218,280,000
Income from passenger flights from Nigeria	54,401,275
Income from cargo loaded into aircraft from Nigeria	49,938,180
Total Income	536,288,205
Deduct:
Depreciation	1,974,125
Staff salaries	14,373,968
General provision	215,050
Other expenses	579,913
Total Deductions	17,143,056
Net Profit	519,145,149

Additional Information:

Capital allowances were agreed with the relevant authority at 110% of the depreciation charged.
Other expenses include disallowable expenses amounting to ₦425,000.

Required:

As the Tax Consultant, prepare computations showing:

a. Total Profits of Obi Airlines Limited for Nigerian tax purposes. (12 Marks)
b. Companies Income Tax Liability for the relevant year of assessment. (2 Marks)
c. Tertiary Education Tax Liability. (1 Mark)

(Total 15 Marks)

Answer

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Tags: Airline Taxation, Companies Income Tax, Non-Resident Companies, Tax Liability, Tertiary Education Tax
Level: Level 3

Topic: Companies Income Tax (CIT)
Series: MAY 2018

TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement

Calculation of taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year.

Question

Atlat Airline Limited was incorporated in New York, USA, on June 6, 1993. It is engaged in the carriage of mails, passengers, and livestock into and out of Nigeria. The company’s worldwide statement of profit or loss as at December 31, 2018, has revealed the following:

Description	Amount (N)
Income from passengers flown from New York to Nigeria	510,720,000
Income from passengers loaded and flown out of Nigeria	241,305,000
Income from cargo loaded into aircraft to Nigeria from other routes	181,300,100
Income from cargo freight from Nigeria to New York	102,960,000
Total Income	1,036,285,100

Additional information:
(i) The Federal Inland Revenue Service is satisfied that the tax authority in New York computes and assesses a company which operates an aircraft on a basis not materially different from that prescribed by Companies and Allied Matters Act Cap C21 LFN 2004 (as amended).
(ii) The tax authority in New York has certified the adjusted profit and depreciation allowance ratios.
(iii) Out of the overhead expenses, N2,194,500 relates to disallowable expenses.

Required:
Compute the taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year. (16 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Airline Taxation, Income Tax, Operating Expenses, Tax computation
Level: Level 1

Topic: Tax Administration and Enforcement
Series: MAY 2021

AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)

Tax computation for Obi Airlines Limited operating in Ethiopia, including Total Profits and tax liabilities in Nigeria for income sourced from Nigeria.

Question

In 2012, under the Chairman’s directive, the group decided to diversify its business into some African countries by establishing Obi Airlines Limited, incorporated in Ethiopia.

The financial results of Obi Airlines Limited for the year ended December 31, 2015, are as follows:

Description	Amount (₦)
Income from passenger flights on other routes	213,668,750
Income from cargo loaded into aircraft on other routes	218,280,000
Income from passenger flights from Nigeria	54,401,275
Income from cargo loaded into aircraft from Nigeria	49,938,180
Total Income	536,288,205
Deduct:
Depreciation	1,974,125
Staff salaries	14,373,968
General provision	215,050
Other expenses	579,913
Total Deductions	17,143,056
Net Profit	519,145,149

Additional Information:

Capital allowances were agreed with the relevant authority at 110% of the depreciation charged.
Other expenses include disallowable expenses amounting to ₦425,000.

Required:

As the Tax Consultant, prepare computations showing:

(Total 15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Airline Taxation, Companies Income Tax, Non-Resident Companies, Tax Liability, Tertiary Education Tax
Level: Level 3

Topic: Companies Income Tax (CIT)
Series: MAY 2018

TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement

Calculation of taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year.

Question

Description	Amount (N)
Income from passengers flown from New York to Nigeria	510,720,000
Income from passengers loaded and flown out of Nigeria	241,305,000
Income from cargo loaded into aircraft to Nigeria from other routes	181,300,100
Income from cargo freight from Nigeria to New York	102,960,000
Total Income	1,036,285,100

Required:
Compute the taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year. (16 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Airline Taxation, Income Tax, Operating Expenses, Tax computation
Level: Level 1

Topic: Tax Administration and Enforcement
Series: MAY 2021

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AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)

Tax computation for Obi Airlines Limited operating in Ethiopia, including Total Profits and tax liabilities in Nigeria for income sourced from Nigeria.

TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement

Calculation of taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year.

AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)

Tax computation for Obi Airlines Limited operating in Ethiopia, including Total Profits and tax liabilities in Nigeria for income sourced from Nigeria.

TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement

Calculation of taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year.

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AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)

Tax computation for Obi Airlines Limited operating in Ethiopia, including Total Profits and tax liabilities in Nigeria for income sourced from Nigeria.

You're reporting an error for "AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)"

TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement

Calculation of taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year.

You're reporting an error for "TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement"

AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)

Tax computation for Obi Airlines Limited operating in Ethiopia, including Total Profits and tax liabilities in Nigeria for income sourced from Nigeria.

You're reporting an error for "AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)"

TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement

Calculation of taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year.

You're reporting an error for "TAX – May 2021 – L1 – SB – Q2a – Tax Administration and Enforcement"

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