Minister of Finance Issues Order on Significant Economic Presence by Non-Nigerian Companies


Friday, May 29, 2020  10:20 PM / by KPMG Nigeria/ Header Image Credit:  @FinMinNigeria

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The Federal Government of Nigeria has published the Companies Income Tax (Significant Economic Presence) Order, 2020 ("the Order") in its Official Gazette No. 21, Vol 107 of 10 February 2020. The Order, signed by the Honourable Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, pursuant to her powers under Section 13(4) of the Companies Income Tax Act, 2004 (as amended) [CITA], commenced on 3 February 2020. 


The Order provides guidance on the definition of significant economic presence (SEP) in relation to taxable income derived by any company other than a Nigerian company ("foreign company") in Nigeria, based on Section 13(2)(c) and (e) of CITA.


The Order also stipulates a  N25 million turnover threshold for a foreign company deriving income in Nigeria through digital means for the purpose of SEP. Further, foreign companies involved in the provision of technical, professional, management or consultancy services shall be deemed to have SEP in Nigeria where such companies receive any payment from a person resident in Nigeria or a fixed base or agent of a foreign company in Nigeria.


Other key highlights of the Order include:

  • exemption of payments made under a contract of employment, teaching in, or by, an educational institution and payment by a foreign fixed base of a Nigerian company.
  • definition of terms, such as connected persons, technical services, and wireless and electronic apparatus, for SEP purpose.


The issuance of the Order signals the operationalization of the provisions of Section 13(2)(c) and (e) of the CITA introduced by the Finance Act, 2019.


Download Here Companies Income Tax (Significant Economic Presence) Order 2020

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