As of June, 2022, there have been a few regulatory developments relevant to the tech space in Nigeria. We have set out below 7 notable developments to guide tech companies doing or intending to do business in Nigeria.
1. Non-resident digital companies may now be subject to income tax on a deemed profit basis.
Under the Finance Act 2021, enacted in January 1, 2022, the Federal Inland Revenue Service ("FIRS") is empowered to charge and assess companies providing digital services that have a significant economic presence in Nigeria on a deemed profit basis (ie fair and reasonable percentage of its profits that are attributable to its presence in Nigeria). This will occur where it appears to the FIRS that for any year of assessment, the company either has no assessable profits or its assessable profits are in the opinion of the FIRS less than what should be realized from its operations in Nigeria or, where the assessable profits of the company cannot be ascertained.
2. Non-resident digital companies can now be compelled to collect and remit Value Added Tax ("VAT") to the FIRS.
Where a non-resident company provides taxable goods and services to a person in Nigeria ("Beneficiary"), the Finance Act, 2021 empowers the FIRS to appoint any person (including the non-resident company) to act as a collection agent for the collection and remittance of VAT on the goods and services provided. The Beneficiary will not be obliged to withhold and remit VAT unless the entity appointed by the FIRS fails to collect and remit VAT as instructed.
3. Owners of copyrighted works will be exclusively entitled to post their works online.
There is currently a copyright bill undergoing the legislative review process that will repeal the existing Copyright Act and replace it with a new Copyright Act. (the "Copyright Bill").
The Copyright Bill recognises the exclusive rights of a work owner to post his work online. Once enacted, persons whose copyrights have been infringed on online will be entitled to instruct platforms hosting the infringing work to take down or disable public access to the infringing content or the link to such content. The Nigerian Copyrights Commission will also be entitled to block the access of the public to any content, link, or website that it reasonably believes to infringe copyright.
4. The Nigerian Data Protection Bureau ("NDPB") is now responsible for enforcing data protection in Nigeria.
The President of Nigeria on February 4, 2022, established the NDPB. The NDPB is to replace the National Information Technology Development Agency ("NITDA") as the principal body for data protection in Nigeria. It is important to note that the NDPB is now responsible for among others, the registration of Data Protection Compliance Organisations and data privacy breach reporting.
5. The CBN has published draft Operating Guidelines for Open Banking in Nigeria.
The Central Bank of Nigeria on May 13, 2022, published the exposure draft of the Operating Guidelines for Open Banking in Nigeria. The guidelines recognises the ownership and control of data by customers of financial and non-financial service providers and provides for the conditions under which other service providers can be granted access to customer information. It is expected that open banking will drive innovation in the banking and payments sector.
6. The Securities and Exchange Commissions ("SEC") has released rules for digital asset platforms.
The SEC released the Rules on Issuance, Offering Platforms, and Custody of Digital Assets on May 11, 2022. The rules regulate: (i) the issuance of Digital Assets as Securities; (ii) Digital Assets Offering Platforms (DAOPs); (iii) Digital Asset Custodians (DACs); (iv) Virtual Assets Service Providers (VASPs); and (v) Digital Assets Exchange (DAX). It also provides for the licensing requirements, non-permissible activities, minimum paid-up capital requirement, etc for companies carrying on businesses related to digital assets.
7. Insurance Web Aggregators are now regulated by the National Insurance Commission ("NAICOM").
NAICOM on February 01, 2022, issued the Insurance Web Aggregators Operational Guidelines ("Guidelines"), 2022 for companies that own or maintain websites that provide information to the general public on insurance products, prices and features of various insurance companies ie Insurance Web Aggregators. Entities that intend to carry on business as web aggregators are required to apply to NAICOM for a license while entities already providing web aggregator services were given a grace period of 60 days to obtain a license from NAICOM.
To read more about these regulations, please visit our website at www. pavestoneslegal.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.