NIGERIA Law and Practice Contributed by: Tiwalola Osazuwa, Peretimi Akinmodun, Lazarus Uwa Kalu and Mubaraq Popoola, ǼLEX
digital services and goods are subject to com - panies income tax (CIT) at the rate of 20% (for a medium-sized company whose turnover is between NGN25 million and NGN100 million) or at the rate of 30% (for a large company whose turnover is above NGN100 million). Under the provisions of Section 13(2) of the Companies Income Tax Act and the Companies Income Tax (SEP) Order 2020, a non-resident entity (NRE) is deemed to have a significant eco - nomic presence (SEP) in Nigeria and is liable to tax on its profits derived from Nigeria if it: • derives over NGN25 million (or its equivalent in other currencies) in gross turnover from activities like streaming or downloading digital content, transmitting user data collected from Nigeria, providing goods and services via digital platforms, or offering intermediation services connecting suppliers and customers in Nigeria through a digital platform; • uses a Nigerian domain name or registers a website in Nigeria; • engages purposefully and consistently with Nigerian users through a digital platform tar - geting the Nigerian market, including pricing or payment in naira; or • receives payments from a person resident in Nigeria, or a fixed base or an agent of an NRE as compensation for the provision of techni - cal, professional, management or consultancy services. Withholding Tax (WHT) Where any amount is payable by a Nigerian com - pany to another company or person as fees for the provision of technical, professional, manage - ment or consultancy services, the company is required to deduct WHT at the rate of 5% (if the payment is due to another Nigerian company) or 10% (if due to an NRE) and pay it to the Federal
Inland Revenue Service (the “FIRS”). The WHT deducted on any of these payments to an NRE is the final tax payable in Nigeria. For all other service payments, the company is required to deduct WHT at the rate of 2% (if the payment is due to another Nigerian company) or 5% (if due to an NRE). This 5% WHT is not the final tax payable in Nigeria, but an advance payment of CIT, which an NRE can use to offset its ultimate CIT liability upon filing its tax returns. Capital Gains Tax (CGT) CGT at the rate of 10% is payable on chargeable gains arising from the disposal of digital assets in Nigeria. VAT VAT is levied on the supply of digital services and goods in Nigeria at the rate of 7.5%. Tax Compliance Management Challenges NREs that supply digital services to Nigerian customers are required to register with the FIRS for VAT purposes, collect VAT on their supplies and remit it to the FIRS. In order to fulfil these obligations, an NRE would have to maintain a local presence or appoint a local third party as its tax compliance agent. 1.3 Taxation of Digital Advertising There are no special rules for the taxation of digital advertising revenues in Nigeria. The tax treatment of digital services applies equally to Consumer Protection Laws in the TMT Sector The FCCPA is the principal consumer protection law applicable to digital goods and services in the TMT sector. Certain sectors have their own specific consumer framework. For example, in the financial sector, the CBN issued the Con - digital advertising revenues. 1.4 Consumer Protection
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