Section 15 — PETROLEUM (INCOME TAX) ACT 1967

(a)

subject to subsection (2), any sum payable for that period

(or for any part of that period) by way of interest upon any money borrowed by that chargeable person and—

(i)

employed in that period in the production of the gross income; or

(ii)

laid out on assets used or held in that period for the production of the gross income:

Provided that any sum deductible under this paragraph shall not exceed the amount which in the opinion of the Director General would have been the fair amount of interest in a similar borrowing transaction made by independent parties dealing with one another at arm’s length;

(b)

rent payable for that period (or for any part of that period)

by that chargeable person in respect of any land or building or part thereof occupied by that chargeable person in that period for the purpose of producing the gross income;

(c)

expenses incurred during that period for the repair of premises, plant, machinery or fixtures employed in the production of the gross income or for the renewal, repair or alteration of any implement, utensil or article so employed

(being one of a class of implements, utensils or articles which as a class have a working life under normal conditions of use of less than two years or are subject to substantial wastage or loss annually or more frequently), excluding the cost of reconstructing or rebuilding—

(i)

any premises, buildings, structures or works of a permanent nature;

(ii)

any plant or machinery (other than an implement, utensil or article of such a class); or

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(iii)

any fixtures;

(d)

assessment rates payable for that period (or for any part of that period) by that chargeable person under any law relating to local authorities, in respect of any property used for his petroleum operations;

(e)

such other deductions as may be prescribed.

(2)

Where a chargeable person, being a chargeable person to which paragraph (1)(a) applies in relation to gross income for the basis period for a year of assessment and in relation to borrowed money, has made

(otherwise than for the purpose of producing that gross income) any loan of money or any investment in movable or immovable property, and the loan or any part thereof is outstanding at any time in that period or the investment or any part thereof is held by that chargeable person at any time in that period—

(a)

the total sum payable for that period or any part thereof by way of interest on that borrowed money, which qualifies for deduction under paragraph 15(1)(a), or any part of the total sum which so qualifies, shall be deemed to accrue evenly over that period or part thereof, and so much of that sum as is thus found to accrue during each calendar month shall be taken to be the monthly figure for the purposes of this subsection;

(b)

if at the end of any calendar month the aggregate of—

(i)

the amount of the loan then outstanding if any; and

(ii)

the cost of so much of the investment as is held at that time if any, is less than the amount of that borrowed money, the monthly figure for that month shall be reduced by an amount which bears to that monthly figure the same proportion as that aggregate bears to the amount of that borrowed money;

Petroleum (Income Tax)

(c)

if at the end of any calendar month the aggregate mentioned in the preceding paragraph is more than the amount of that borrowed money, the monthly figure for that month shall be reduced to nil; and

(d)

the amount of the deduction to be made for that period in respect of that borrowed money shall be an amount consisting of the aggregate of—

(i)

the monthly figures for all calendar months to which paragraph (b) or (c) applies, as reduced by either of those paragraphs; and

(ii)

the monthly figures for the other calendar months.

(3)

In subsection (2) “calendar month”, in relation to a basis period or part thereof, means a period which is included in that basis period or part thereof and is either—

(a)

one of the twelve named months of the Gregorian calendar;

or

(b)

where the basis period or part thereof includes a part, but not the whole, of such a month, that part of that month.

Deduction in respect of irrecoverable debt, contribution to approved scheme, intangible drilling expenses, certain capital expenditure and royalty