Digital SEP Tax
Calculator
Estimate the tax liability for foreign digital companies with Significant Economic Presence in Nigeria — streaming, e-commerce, SaaS, digital advertising, and data monetisation.
Digital Business Details
What Is Significant Economic Presence (SEP)?
The NTA 2025 codifies the concept of Significant Economic Presence (SEP) to tax foreign digital companies that profit from Nigerian consumers without a physical office in the country. If a foreign company earns above the SEP threshold from Nigerian users, it is deemed to have a taxable presence and must pay CIT on its Nigerian profits plus collect and remit VAT.
Who Is Affected?
The SEP rules target foreign companies providing digital services consumed in Nigeria, including: streaming platforms (Netflix, Spotify, Disney+), e-commerce marketplaces (Amazon, AliExpress, Shein), SaaS providers (Google Workspace, Microsoft 365, Zoom), digital advertising (Google Ads, Meta Ads), app stores (Apple, Google Play), and data monetisation platforms.
Thresholds and Rates
A foreign company has SEP in Nigeria if its annual revenue from Nigeria is at least ₦25 million or it has a significant number of Nigerian users. Once the threshold is met, the company must register with the NRS, file annual CIT returns, and pay CIT at 30% on deemed Nigerian profits. Additionally, VAT at 7.5% applies to all digital services supplied to Nigerian consumers — this applies even below the SEP threshold.
Compliance Requirements
Foreign digital companies with SEP must: register with the NRS and obtain a TIN, appoint a local representative or agent, file annual CIT returns, and remit VAT monthly. Non-compliance allows the NRS to direct Nigerian banks and payment processors to block remittances to the non-compliant entity.
Digital SEP Tax Rates
NTA 2025Frequently Asked Questions About Digital SEP Tax
No. SEP is specifically designed for foreign companies without a physical presence in Nigeria. Nigerian-registered companies are already subject to CIT on their income through normal tax rules regardless of whether their business is digital.
The NRS uses a deemed profit approach based on a fair and reasonable percentage of Nigerian revenue. The company can provide its actual Nigerian profit figures if it maintains separate accounts for its Nigerian operations, which may result in a lower tax liability.
Yes. VAT at 7.5% applies to all digital services consumed by Nigerian customers regardless of whether the SEP threshold is met. The ₦25 million threshold only determines whether CIT applies — VAT is always due.
Most existing treaties do not specifically address digital taxation. The NTA 2025 SEP provisions generally take precedence over older treaty terms unless the treaty has a specific digital services clause. New treaties are being negotiated to address this gap.
The NRS can direct Nigerian banks and payment processors to block remittances to non-compliant foreign entities. Additionally, standard penalties apply: 10% late filing penalty, 10% late payment penalty, and daily interest at the CBN MPR.
If a foreign company earns revenue through app store purchases or in-app payments made by Nigerian users, that revenue counts towards the SEP threshold. Both Apple and Google are expected to collect and remit VAT on digital services sold to Nigerian consumers.
SEP primarily targets B2C transactions (services provided to Nigerian consumers). However, B2B digital services may also trigger SEP if the foreign provider has no physical presence but derives significant revenue from Nigerian business customers.
Foreign companies with SEP must maintain records of: Nigerian user counts, revenue attributable to Nigerian users, expenses related to Nigerian operations, VAT collected and remitted, and CIT computations. Records must be kept for at least 6 years.
Yes. Foreign digital companies can appoint a Nigerian representative or agent to handle their tax compliance obligations. The agent is responsible for filing returns, remitting taxes, and maintaining records on behalf of the foreign company.
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