Introduction
The Minister of Finance, Budget and National Planning (the
Minister) has issued the Companies Income Tax (Significant Economic
Presence) Order, 2020 (SEP Order), to complement the 2019 Finance
Act (FA 2019).
The SEP Order sets out the conditions under which non-resident
companies (NRCs) that provide digital services; or technical,
professional, management, or consultancy services (TPMC); to
Nigerian customers, from outside Nigeria will be deemed to have a
taxable nexus, and therefore be liable to tax, in Nigeria. You can
find the SEP Order
here.
Finance Act 2019 and SEP
Prior to the entry into force of FA 2019, NRCs were only deemed
to be liable to tax in Nigeria on their business income if they:
(i) carried on business through a fixed base in Nigeria; (ii)
carried on business through an agent in Nigeria; (iii) executed a
turnkey project in Nigeria; or (iv) failed to price their related
party transactions at arm's length.
