Neither the Companies Income Tax Act nor any Nigerian Tax Law provides for the definition of the term tax or corporate tax. In an Australian case of Mathews v. Chicory Marketing Board, a tax has been defined as “a compulsory exaction of money by a public authority for public purposes, or taxation is raising money for the purpose of government by means of contributions from individual persons.” In addition, Mr. Justice Roberts, in an American case of United State v. Butler, defined tax as follows: “A tax in general understanding of the term and as Used in constitution, signifies an exaction for the support of government.” Accordingly, tax is not an optional payment or voluntary donation to the government. It is rather, a kind of an enforced contribution exacted in accordance with the legislative authority. Therefore tax, in modern period takes the forms of pecuniary burden laid upon individuals or property to support government. It is normally imposed by statute. In the same vein, corporate tax is defined as a tax levied on corporations' profits. In other words, it is a tax levied by various jurisdictions, on the profits made by companies. It is therefore a tax imposed by the government upon the profit of any company incorporated within or outside Nigeria. Taxation in general and corporate tax in particular, looms in every nook and corner of the nation’s economy. It therefore plays a pivotal role in the development of the nation. For instance, in year 2009 the Federal Government generated N2.2tn and N2.8tn in 2010 as tax revenue. Corporate taxation has therefore occupied a great space and significant position in the economy of the country. The aim of this paper is to examine some problems and point out some loopholes which arise from the legislation governing the corporate taxation which may affect the status of investment in Nigeria. 1.2 IMPOSITION OF TAX
It has been provided under the Company Income Tax Act (CITA) that: Subject to the provision of this Act, the tax shall … be payable … upon the profit of any company accruing in, derived from, brought into, orreceived in Nigeria…. Nigerian corporate tax is governed by the CITA. In other words, a part from the oil producing companies which as the result of the complicated nature of the oil industries are taxed under the Petroleum Profit Tax Act(PPTA), the profits of all Nigerian and foreign incorporated companies accruing in, derived from, brought into, or received in Nigeria are normally taxed under the CITA. It is also worthy to note that the phrases “accruing in, derived from, brought into, or received in Nigeria,” encapsulated in the above provision need to be thoroughly scrutinized. In the case of Commissioner of taxation v. Kirk the phrase “derived from” was held to be synonymous with “accruing in”. Both were meant to refer to “acquired, obtained or got.” Additionally Hooper J. made a further elucidation in respect of the above words. In the case of Taufic Karan v. Commissioner of Income Tax, he lucidly stated that: “The word “ accruing in” and “ received in” appear to me to import a clear territorial limitation to Nigeria.”
1.3 MINIMUM TAX CLAUSE
It is provided under the CITA that:
...Where in any year of assessment, the ascertainment of total assessable profits from all sources of a company result in a loss, Or where a company’s ascertained total profits results in no tax payable, Or to payable which is less than the minimum tax, there Shall be levied and paid by the company the minimum tax prescribed... It is clear from the above that CITA provides for the payment of corporate tax even if the company fails to secure any gain or profit. In other words, companies are obliged to pay tax even in the event of incurring loss in their business. This is a serious problem that has a negative impact on the...