Nigeria: New Order on Significant Economic Presence

The Federal Republic of Nigeria has published the Companies Income Tax (Significant Economic Presence) Order, 2020 effective from February 3rd, 2020, to define and determine the scope of Significant Economic Presence (SEP) in Nigeria.

The Order is made pursuant to the Finance Act 2019 which amended the tax laws and adopted the SEP principle to tax non-Nigerian companies undertaking digital transactions or offering certain services in Nigeria. However, the Act conspicuously did not define SEP thereby creating a gap in its application and implementation.

The Minister of Finance, empowered by the Act, has now issued this Order to provide guidance and clarity on SEP in Nigeria.

Key provisions of the Order include:

A. Digital or related transactions

1. Non-Nigerian companies shall have a significant economic presence in Nigeria and liable to tax where they:

i. derive a gross turnover or income of more than N25 million or its equivalent in other currencies, in that year, from any or combination of the following:

  • streaming or downloading services of digital contents, including but not limited to movies, videos, music, applications, games and e-books to any person in Nigeria;
  • transmission of data collected about Nigerian users which has been generated from such users’ activities on a digital interface including website or mobile applications;
  • provisions of goods and services directly or indirectly through digital platform to Nigeria; and
  • provisions of intermediate services through a digital platform website or other online applications that link suppliers and customers in Nigeria;

ii. use Nigerian domain name (.ng) or register a website address in Nigeria; or

iii. have a purposeful and sustained interaction with persons in Nigeria by customising their digital page or platform to target persons in Nigeria, including reflecting the prices of products or services in Naira or providing options for billing or payment in Naira. 

2. Companies covered under multilateral agreements or consensus arrangement which address tax challenges arising from the digitization of the economy to which Nigeria is a party shall be treated in accordance with such agreement or arrangement.

B. Services

1. Non-Nigerian companies carrying on a trade or business comprising the furnishing of services of technical, professional, management or consultancy in nature, shall have a significant economic presence in Nigeria and liable to tax where it earns any income or receives any payment from:

i. a person resident in Nigeria; or

ii. a fixed base or agent of a non-Nigerian company in Nigeria.

2. Service of a technical nature means any services of a specialized nature (including advertising services, training, or the provision of personnel) that are neither professional, management nor consultancy services.

3. There is no SEP, and therefore no tax liability, in relation to a payment where the payment is made to an employee of the person making the payment under an employment contract, for teaching in or by an education institution or by a foreign fixed base of a Nigeria Company.

For more information or assistance on tax issues, please contact our tax desk at