Section 38 — Deemed profit assessment or income assessment

(1) Where a business produces either no assessable profit or an assessable profit which is less than expected from that business or the true amount of the assessable profit cannot be readily ascertained, the relevant tax authority may, in the case of—

(a) a resident, assess and charge that taxable person on such fair and reasonable percentage of the gross income from the trade or business as the relevant tax authority may determine; or

(b) a non-resident, the profits shall be any amount resulting from applying the profit margin of the person to the turnover generated from Nigeria.

(2) For the purpose of subsection (1) of this section “profit margin” shall be the proportion of the Earnings Before Interest and Tax (“EBIT”) to income or revenue in the published audited financial statement of the business, and in the case of persons that are not required to publish financial statements, the profit margin as may be ascertained by the relevant tax authority from financial statements of comparative companies.