Avoiding Permanent Establishment Risk – Nigeria's New Dependent Agents Rule

In February 2018, Nigeria's President signed the Presidential Executive Order for Planning and Execution of Projects, Promotion of Nigerian Content in Contracts and Science, Engineering and Technology ("Presidential Order 5"). The primary object of Presidential Order 5 is to develop local technical capacity generally and more specifically, in the areas of science, technology and engineering.

One of the approaches taken by Presidential Order 5 is to mandate all Ministries, Departments and Agencies of Government ("Procuring Entities") to give preference to Nigerian companies in the award of contracts. In this context, Nigerian companies are defined as companies with no less than 51% equity shares owned by Nigerians. Presidential Order 5 allows Procuring Entities to award government contracts to Foreign Entities only where local expertise is lacking and where that Foreign Entity puts forward a demonstrable and verifiable plan for indigenous capacity development.