The Finance Act 2019 introduced an amendment to the Companies Income Tax Act to impose tax on a foreign entity with respect to certain services or digital transactions if it has a Significant Economic Presence (SEP) in Nigeria. It further provides that the finance minister may by order, determine what constitutes SEP in Nigeria. Consequently, the finance minister has now issued an order with an effective date of 3 February 2020.


Digital transactions

A foreign entity involved in digital transactions will be deemed to have created an SEP in Nigeria and therefore liable to tax if it:

  1. derives income of N25m or equivalent in other currencies from Nigeria in a year
  2. uses Nigerian domain name (.ng) or registers a website address in Nigeria
  3. has a purposeful and sustained interactions with persons in Nigeria by customizing its digital platform to target persons in Nigeria e.g. by stating the prices of its products or services in Naira

For the purposes of (1) above, revenue derived from Nigeria include those in respect of:

  • Streaming or downloading of digital contents
  • Transmission of data collected about users in Nigeria
  • Provision of goods or services directly or through a digital platform
  • Intermediation services that link suppliers and customers in Nigeria

Activities carried out by connected persons shall be aggregated to determine the N25m threshold (where applicable).

Any company covered under any multilateral agreement to which Nigeria is a party will be treated in accordance with those agreements from the effective date in Nigeria.


A foreign entity providing technical (including training, advertising, supply of personnel), professional, management or consultancy services shall have an SEP in Nigeria in any accounting year if it earns any income or receives any payment from a person resident in Nigeria or a fixed base or agent of a foreign entity in Nigeria.

Payments to employees of a foreign entity or for teaching in an education institution are exempted.

Download PwC Tax Alert_Significant Economic Presence Order_May2020

Download Companies Income Tax (Significant Economic Presence) Order 2020

Originally published 29 May 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.