Every company, according to Section 548 of CAMA, after incorporation shall –
(a) “paint or affix, and keep painted or affixed, its name and registration number on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible;
(b) have its name engraved in legible characters on its seals; and
(c) have its name and registration number mentioned in legible characters in all business letters of the company and in all notices, advertisements, and other official publications of the company, and in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills or parcels, invoices, receipts, and letters of credit of the company.
(2) If a company fails to paint or affix, and keep painted or affixed its name in the manner directed by this Act, it shall be liable to a fine of N100 for not so painting or affixing its name, and for every day during which its name is not so kept, painted or affixed; and every director and manager of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty.
(3) If a company fails to comply with the provisions of paragraph (b) or (c) or sub-section (1) of this section, the company shall be guilty of an offence and liable to a fine of N500.
Generally, expenses must be incurred for the purpose of enabling a person to carry on and earn profits of a trade. At some stage, limited liability companies will incur some costs for professional services, such as audit, accountancy, tax consultancy and possibly legal fees which are allowable for tax purposes.
When business expenses are said to be ‘not allowable’, this means they would not be deducted from the company’s profits when calculating a company’s income tax liability.
As a rule, for an expense to qualify as allowable deduction in computing adjusted profits, it has to satisfy one major requirement which is, it has to be incurred wholly, exclusively, necessarily and reasonably . The burden of proof that an expense meets these conditions to be deductible rests solely with the taxpayer. Examples of the expenses listed in the Companies Income Tax Act, LFN 2004 (as amended) include bad and doubtful debts, rents and premiums, interests, repairs and maintenance and contributions to a pension, provident or retirement benefit funds.
Section 24 of CITA provides that in order to ascertain the profits or loss of any company of any period from any source chargeable with tax under CITA, all expenses ‘‘wholly, exclusively, necessarily and reasonably incurred’’ for that period by that company in the production of those profits shall be deducted.
By virtue of the CITA 2007 Amendment to the CITA, the restriction on directors’ remuneration with respect to a property holding company to a maximum of N10,000, subject to three directors is no longer applicable as such companies can now fully claim amount paid, provided such expenses are wholly andū reasonably incurred for the purpose of the business and also subject to the staff collective agreement approved by the Ministry of Employment, Labour and Productivity.
Likewise, in computing the adjusted profit of any petroleum producing company from its petroleum operations for any accounting period, all out-goings and expenses ‘‘wholly, exclusively and necessarily incurred’’, whether within or without Nigeria, shall be deducted in arriving at the adjusted profit.(Act No. 15 of 1973) Such expenses are specifically listed in Section 10 of Petroleum Profits Tax Act (PPTA) LFN 2004.
The expenses include among others productive and non-productive rents, royalties, interest, repairs, bad debts, specific provision for doubtful debts, tangible or intangible drilling costs and costs of exploration and drilling of the next two appraisal wells in the same field whether the wells are productive or not.
‘TEJUTAX’
