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Nigeria: Service provided to related non-resident company subject to VAT

Nigeria: Service provided related non-resident company

The Tax Appeal Tribunal (sitting in Lagos) issued a decision on 13 November 2019 that services provided by a Nigerian company to a related non-resident company were subject to value added tax (VAT).


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The case is: Allan Gray Investment Management Nigeria Ltd. v. Federal Inland Revenue Service


The Nigerian company had executed a marketing and distribution agreement with its parent management company (incorporated and resident in South Africa). The agreement required the Nigerian company to market and distribute the parent company’s equity funds in Nigeria for a fee. The Nigerian company considered its services to the parent company as exported services that were exempt from VAT.

The main issue in the case was whether the services rendered by the Nigerian company to its non-resident parent company qualified as “exported services” under the VAT law and thus were exempt from VAT.

Having considered arguments of both parties, the tribunal held that:

  • The parent company was effectively carrying on business in Nigeria based on its appointment of the Nigerian company as the sole and exclusive local representative of its equity funds in Nigeria.
  • Although the parent company was not physically present in Nigeria, it was legally present through the appointment of the Nigerian company as an agent to market and distribute its services in Nigeria.
  • Hence, the services performed by the Nigerian company in Nigeria on behalf of its related non-resident parent company did not qualify as exported services and were, therefore, liable to VAT in Nigeria. 

KPMG observation

The judgment raises fundamental questions as to when a non-resident company will be characterized as legally present or doing business in Nigeria, and what will qualify a service performed by a Nigerian company for a non-resident company as an exported service for VAT purposes. 

Read a November 2019 report [PDF 127 KB] prepared by the KPMG member firm in Nigeria

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