Section 72 — PETROLEUM (INCOME TAX) ACT 1967

(a)

altering the incidence of tax which is payable or suffered by or which would otherwise have been payable or suffered by any chargeable person;

(b)

relieving any chargeable person from any liability which has arisen or which would otherwise have arisen to pay tax or to make a return;

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(c)

evading or avoiding any duty or liability which is imposed or would otherwise have been imposed on any person by this Act; or

(d)

hindering or preventing the operation of this Act in any respect, may, without prejudice to such validity as it may have in any other respect or for any other purpose, disregard or vary the transaction and make such adjustments as he thinks fit with a view to counteracting the whole or any part of any such direct or indirect effect of the transaction.

(2)

In exercising his powers under this section, the Director General may—

(a)

treat any income of any person as the income of any other person;

(b)

make such computation or recomputation of any gross income, adjusted income or adjusted loss, statutory income, assessable income or chargeable income of any chargeable person as may be necessary to revise any chargeable person’s liability to tax or impose any liability to tax on any chargeable person in accordance with his exercise of those powers; and

(c)

make such assessment or additional assessment in respect of any chargeable person as may be necessary in consequence of his exercise of those powers, nullify a right to repayment of tax or require the return of a repayment of tax already made.

(3)

Without prejudice to the generality of the foregoing subsections, the powers of the Director General conferred by this section shall extend—

(a)

to the charging with tax of any chargeable person who but for any adjustment made by virtue of this section would not be chargeable with tax or would not be chargeable with tax to the same extent; and

Petroleum (Income Tax)

(b)

to the charging of a greater amount of tax than would be chargeable but for any such adjustment.

(4)

Where in accordance with this section the Director General requires from a chargeable person the return of the amount of a repayment of tax already made—

(a)

the Director General shall give to that chargeable person a notice of that requirement and the notice shall be treated as a notice of assessment for the purposes of any appeal therefrom, the provisions of Chapter 2 of Part VII applying with any necessary modifications; and

(b)

that amount shall be deemed to be tax payable under an assessment and section 48 and the other provisions of

Part VIII shall apply accordingly.

(5)

Where in consequence of any adjustment made under this section an assessment is made, a right to repayment is refused or a return of a repayment of tax is required, particulars of the adjustment shall be given with the notice of assessment, with the notice refusing the repayment or with the notice requiring the return of a repayment, as the case may be.

(6)

Transactions—

(a)

between companies one of which has control over the other;

or

(b)

between companies both of which are controlled by some other company, shall be deemed to be transactions of the kind to which subsection (1)

applies if in the opinion of the Director General those transactions have not been made on terms which might fairly be expected to have been made by independent companies engaged in the same or similar activities dealing with one another at arm’s length.

(7)

In this section, “transaction” means any trust, grant, covenant, agreement, arrangement or other disposition or transaction made or

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entered into orally or in writing (whether before or after the commencement of this Act), and includes a transaction entered into by two or more companies with another company or companies.

(8)

For the purposes of this Act, a person shall be taken to have control of a company—

(a)

if he exercises or is able to exercise or is entitled to acquire control (whether direct or indirect) over the company’s affairs and in particular, without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire the greater part of the share capital or voting power in the company;

(b)

if he possesses or is entitled to acquire either—

(i)

the greater part of the issued share capital of the company;

(ii)

such part of that capital as would, if the whole of the income of the company were in fact distributed to the members, entitle him to receive the greater part of the amount so distributed; or

(iii)

such redeemable share capital as would entitle him to receive on its redemption the greater part of the assets which, in the event of a winding up, would be available for distribution among members; or

(c)

if in the event of a winding up he would be entitled to the greater part of the assets available for distribution among members.

(9)

Where two or more persons together satisfy in respect of a company any of the conditions in subsection (8), they shall be taken to have control of the company.

(10)

For the purposes of subsections (8) and (9) there shall be attributed to any person any rights or powers of a nominee for him, that

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is to say, any rights or powers which another person possesses on his behalf or may be required to exercise on his direction or behalf.

(11)

Where the trustees of a trust are members of a controlled company, only one of those trustees shall be deemed to be a member thereof; and, where each of those trustees as such is a person of the kind mentioned in subsection (8) or (9), only one of those trustees shall be taken to be a person of that kind.

(12)

For the purposes of subparagraph (8)(b)(iii) and paragraph (8)(c), any person who is a loan creditor of the company (otherwise than in respect of any loan capital or debt issued or incurred by the company for money lent by him to the company in the ordinary course of a business of banking carried on by him) may be treated as a member, and the references to share capital may be treated as including loan capital.

(13)

In this section, “member” includes in relation to a company, any person having a share or interest in the capital or income of the company, and for the purposes of subsection (8) a person shall be treated as entitled to acquire anything which he is entitled to acquire at a future date or will at a future date be entitled to acquire.

Power to substitute the price and disallowance of interest on certain transactions