The Federal High Court has clarified the rules on taxation of foreign companies operating through a fixed base or permanent establishment in Nigeria. In the past, the Nigerian tax authorities had taken the position in some instances that the business profits of foreign companies are derived from (and therefore taxable in) Nigeria regardless of whether the foreign company had a fixed base in Nigeria. Also in other instances where the FIRS established the existence of a fixed base, it imposed tax on the entire profits from the contract executed by the foreign company rather than only the profits attributable to the fixed base.

In this judgment the Court held that payments sourced from Nigeria without a tax presence in-country is not subject to Nigerian income tax. To be liable to tax, the foreign company must have a fixed base in Nigeria and the profits to be taxed are those attributable to the fixed base.

Here is our tax alert for further details and a copy of the ruling for your reference.

Download PwC Tax Alert_FHC Decision on Taxation of PE or Fixed Base (Dec2015)

Download Judgment - JGC Corporation v. FIRS (on PE)Nov2015

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