As a general rule of Nigerian tax law, if a foreign company has
a Nigerian permanent establishment, then the profits of that
foreign company that are attributable to that permanent
establishment, either directly or indirectly, are chargeable to
Nigerian tax. Given the tax implications of a permanent
establishment and the potential for prosecution in the event of
non-compliance, it is often important to determine whether a
Nigerian permanent establishment is created by a foreign company
carrying out some business Nigeria, ideally before the business
commences.
A permanent establishment is defined by Nigerian legislation as
where:
- A foreign company has a fixed base of business in Nigeria to
the extent that the profit is attributable to the fixed base. The
phrase “fixed base” is not statutorily defined. However
Nigerian courts ( per the case of Shell vs FBIR Maatschppij
B.V.) have defined “fixed base” to connote
“residence” or “ordinary residence” in
terms of a
