TAXATION OF NON-RESIDENT COMPANIES UNDER THE NIGERIA TAX ACT 2025: A CRITICAL ANALYSIS OF NIGERIA’S JURISDICTION TO TAX CROSS-BORDER BUSINESS INCOME

Abstract

Nigeria has, for a long time, taxed non-resident businesses through relatively narrow connecting factors, including a fixed base, a dependent agent, and a warehouse from which goods were delivered. The Nigeria Tax Act, 2025 (“NTA”), however, significantly changes this position. This article examines how the NTA expands Nigeria’s taxing jurisdiction over cross-border business income, particularly through sections 17 to 19, and considers whether the broader framework can be effectively administered. It traces the statutory development from the fixed-base test under the Companies Income Tax Act, through the introduction of the significant economic presence regime in 2019, to the more elaborate framework established by the NTA. The new regime incorporates an expanded concept of permanent establishment, a formal separate-enterprise approach to profit attribution, a minimum tax floor based on turnover, and, notably, a place-of-effective-management test incorporated into the definition of a “Nigerian company.” The article argues that, while these reforms represent a significant and largely overdue modernisation of Nigeria’s international tax framework, important aspects remain underdeveloped. In particular, the undefined economic presence threshold, the turnover-based minimum tax, and the relatively untested residence test appear to have been introduced without sufficient administrative and interpretive infrastructure to ensure consistent application. The article concludes with practical recommendations for the Minister of Finance, the Nigeria Revenue Service (“NRS”), and the National Assembly aimed at strengthening the administration, interpretation, and implementation of the new regime.