Question 7
ICAN
•
2022
•
ADVANCED TAXATION
•
mixed
Case Stimulus
In the last three years, some major oil producing companies had decided to divest their investments from the Nigerian oil and gas sector. One of the reasons for this might be the new global energy order, which seems to favour the evolution of “green environment” as against the present use of hydrocarbons with its inherent environmental degradation and pollution. Similarly, in response to the yearnings of various stakeholders in the oil and gas sector, the Federal Government had enacted the Petroleum Industry Act (PIA) 2021. Generally, the Act provides the legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities and for related matters. Notable commentators and professionals in the sector did suggest that the divestment of major oil and gas operators in Nigeria could be beneficial to the local investors if funds are sourced and deployed to businesses in the sector. Mergers and Acquisition of indigenously-owned oil producing companies had been noted as one of valuable options in this regard.
Requirements
(
a
)
In respect of Petroleum Industry Act 2021, identify the expenses allowable in the computation of adjusted profit of a company in upstream petroleum operations.
(
b
)
Identify and explain SIX implications of mergers and acquisitions in respect of a situation where a new company takes over an existing company.
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About This Question
This is
Ican
2022
Advanced Taxation
Question 7.
It is one of the
mixed
questions from the
2022
Ican
Advanced Taxation
examination.