Petroleum Profit Tax and Government Revenue in Nigeria: A 10-Year Trend Analysis

This study conducts a trend analysis of petroleum profit tax collections and their contribution to federal government revenue in Nigeria over the period 2014 to 2023. As Nigeria's most significant natural resource, crude oil has historically been the dominant source of government revenue. Petroleum profit tax, levied on the profits of companies engaged in upstream oil operations, is among the largest direct tax heads in the national budget. However, fluctuating global oil prices, production shortfalls, and transfer pricing abuses by multinational oil companies have raised concerns about the adequacy of PPT collections. This study relies entirely on secondary data sourced from the Federal Inland Revenue Service, the Nigerian National Petroleum Company Limited, and the Budget Office of the Federation. Time series data on PPT revenues, total federation account receipts, and crude oil production volumes are analyzed using trend line analysis and simple regression. Findings reveal a volatile but generally declining PPT share of total government revenue over the decade, particularly from 2020 onward, reflecting the impact of the COVID-19 oil price crash and post-pandemic production challenges. The study concludes that Nigeria's over-dependence on PPT as a revenue pillar exposes public finances to commodity cycle risks. It recommends accelerated implementation of the Petroleum Industry Act provisions to broaden the revenue base and introduce more stable royalty and tax collection mechanisms in the upstream sector.

Keywords: petroleum profit tax, government revenue, Nigeria, oil sector, trend analysis.