Foreign firms providing consulting, technical, and other remote services to Nigerian clients are reassessing their structures. The trigger: Nigeria’s new Tax Act (NTA) 2025 has narrowed the circumstances under which remote services create a taxable presence in the country.
The shift centres on the treatment of Technical, Professional, Management and Consultancy (TPMC) services under Nigeria’s Significant Economic Presence (SEP) rules.
Under Paragraph 2 of the Significant Economic Presence Order 2020, remote TPMC services provided to Nigerian clients automatically created SEP exposure for non-resident companies. However, that provision was deleted under Section 197(d) of the Nigeria Tax Act 2025.
According to Sulaiman Ishaq Olamide, a tax consultant, the implication is that “mere provision of TPMC services may no longer create SEP exposure for non-resident persons in Nigeria.”
He explained that foreign companies providing such services may now only be subject to withholding tax as final tax unless they create a separate Significant Economic Presence or Permanent Establishment in Nigeria, subject to applicable Double Tax Agreements.
This represents a substantive shift in how foreign firms calculate their Nigerian tax exposure.
Unlike the previous framework, where withholding tax could potentially be credited against a broader SEP-related corporate tax liability, the new regime increasingly positions WHT as the final discharge of Nigerian tax obligations for remote TPMC providers, unless a separate SEP or permanent establishment exists.
The change is expected to influence how multinational consulting, advisory, and technology firms structure contracts and deliver services in Nigeria, particularly where work is performed remotely without a physical office in the country.
The removal of TPMC services as a standalone SEP trigger reduces one layer of exposure, but firms remain cautious because the rules governing digital and remote services remain very active.
The Nigeria Tax Act 2025 restructures the country’s framework for taxing non-resident companies and digital economic activity. While the law narrows SEP exposure for consultancy-related services, it simultaneously expands Nigeria’s taxing rights over digital and remote business models.
According to PwC Nigeria, the taxation of non-resident companies in Nigeria “has evolved significantly” in response to the growth of digital and cross-border services.
The firm noted that Nigeria introduced SEP rules in 2020 to tax foreign companies that earned income from Nigeria through digital activities without physical presence, marking a departure from the traditional physical presence model of taxation.
Under Section 17 of the NTA, SEP is now focused primarily on digital services, including e-commerce, streaming, cloud-based platforms, data transmission, and other digitally delivered services targeted at Nigerian users.
Tayo Ogungbenro and Ngozi Asim-Ita, tax experts at KPMG, in an article titled Nigeria Reforms Tax Laws for 2026, Rewrites Rules for MNEs, noted that taxation under the new regime now extends “beyond just companies with a permanent establishment or significant economic presence in Nigeria.”
The KPMG experts added that foreign companies may still be taxed on payments received for services provided to Nigerian residents, even where no physical presence exists.
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Despite the removal of TPMC services as a standalone SEP trigger, non-resident companies providing services in Nigeria are still required to register for tax and obtain a Tax Identification Number under the Nigeria Tax Administration Act.
Failure to comply attracts penalties of N50,000 in the first month and N25,000 for every subsequent month of default. Nigerian companies that award contracts to unregistered foreign service providers may also face penalties of up to N5 million.
Tax advisers say the changes are now forcing multinational firms to review contract structures, regional delivery hubs, and the classification of service income linked to Nigerian operations.
However, experts caution that the reforms do not amount to a relaxation of Nigeria’s tax regime for foreign companies.
Sulaiman noted that although TPMC as an SEP trigger has been removed, “the scope of SEP, particularly for digital and remote services, has been expanded under the NTA,” adding that foreign service providers should reassess their possible tax exposure under the new rules.
PwC also warned that while the reforms improve clarity in some areas, they introduce new complexities around the taxation of digital services, remote platforms, and intangible-driven income such as software, licensing, and data-related transactions.
For multinational firms, the result is a mixed shift to lower exposure for some traditional consultancy arrangements, but broader scrutiny of digital and remotely delivered business models.
Analysts expect the Nigeria Revenue Service to issue additional guidelines and circulars in the coming months to clarify how the new rules will be implemented across sectors.
What is increasingly clear, however, is that Nigeria’s tax system is moving further away from physical presence as the main basis for taxation and toward a model focused on where economic value is created and consumed.