The Lagos State Internal Revenue Service is targeting payments to creators on digital platforms. It classifies those payouts as royalties subject to a 5% withholding tax. Platforms including Mainstack have already received statutory notices. The tax operates as an advance on income tax owed; small creators below tax thresholds could see refunds.
Nigeria's tax authority is imposing a new withholding tax on digital creator platform payments. According to TechCabal, the Lagos State Internal Revenue Service (LIRS) is attempting to classify payments to creators on platforms like Selar as royalties subject to a 5% withholding tax. The agency stated that "where royalty is paid to an individual, resident or non-resident, the applicable withholding tax rate under the WHT Regulations is 5%."
The agency's rationale is that digital content transactions represent licensing intellectual property. LIRS explained that payment "may constitute consideration for the use of, or the right to use, the creator's intellectual property." This classification sidesteps the debate over whether creator earnings are salaries, sales revenue, or professional fees. It places them squarely in the royalty bracket, triggering the 5% withholding rule.
For creators using platforms like Selar and Mainstack, the mechanic is straightforward but constraining. If a creator earns 1 million Nigerian Naira, the platform must withhold 50,000 Naira and supply a credit note redeemable against the creator's actual tax liability. Small creators earning below Nigeria's tax filing thresholds could, in theory, reclaim that withholding as a refund. But the administrative burden falls on platforms to handle the deductions and on creators to track and claim credits.
LIRS confirmed it is "conducting compliance verifications across digital economy platforms that process payment distributions to individual content creators". The agency is pursuing statutory action against multiple platforms. For Nigeria's rapidly growing podcast, video, and music creator base, this represents a new compliance friction that could slow platform adoption or shift creator incentives toward unmonitored channels.
The move underscores a global tension: as creator platforms mature, tax authorities move to classify and monetise creator income. Nigeria's version is more rigid than some markets, and the 5% rate is material enough to affect creator take-home, especially for podcasters and musicians using Selar or Mainstack as their primary revenue channel.