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Software as a Service (SaaS) businesses face unique tax challenges in 2026. The shift from one-time sales to recurring subscriptions has led the NRS to introduce the Merchant-Buyer Solution (MBS), a system that tracks digital payments in real-time to ensure VAT compliance.
The SaaS Tax Stack
- VAT on Subscriptions: A 7.5% VAT must be added to all subscription tiers. The ‘Place of Supply’ rule means if the user is in Nigeria, the tax is due in Nigeria.
- WHT on Licensing: Technical fees and software licenses often attract a 10% WHT. See WHT for Technical Services.
- SEP Rules: For foreign SaaS firms (like Slack or Zoom) selling to Nigerians, the ₦25M turnover threshold triggers CIT.
If you are a local SaaS startup, leverage the SME tax-free incentives to scale. For more on the digital shift, read Digital Tax in Nigeria. Visit NRS.gov.ng for API documentation for e-invoicing.
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