The Selar row shows how Nigeria plans to tax its creator economy
Nigerian creators may lose 5% of their income to tax if the government decides an ebook sale is a royalty. Here's why it matters.
On July 15, Douglas Kendyson, the CEO of Nigerian creator economy startup Selar, complained that the Lagos State Internal Revenue Service (LIRS) was pressuring his company over a 5% royalty fee on all sales processed through the platform. LIRS maintains that payments for digital content should be treated as royalties rather than sales, which would require platforms to withhold 5% before paying creators.
LIRS explained that when someone purchases an ebook or course from Selar, they are paying for access to the creator's copyrighted work, and this payment may constitute consideration for the use or right to use the creator's intellectual property. The agency is testing whether payments for digital content are royalties or sales to determine the appropriate tax treatment.
If a withholding obligation exists, the responsibility falls on the entity that makes or facilitates the payment. LIRS met with Selar informally on July 17, stating that some lines "could've gotten crossed" and a formal meeting is scheduled to clarify how Nigeria's new tax laws apply to creators. LIRS confirmed the meeting but emphasized that it was part of ongoing reconciliation efforts, not a specific discussion about tax liabilities for creators.
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