Douglas Kendyson, founder and CEO of Selar, an African creator economy platform, has publicly accused the Lagos State Inland Revenue Service (LIRS)for hounding the company with backdated royalty demands and appealed to Lagos State Governor Babajide Sanwo-Olu and Minister of Art, Culture, Tourism and the Creative Economy, Hannatu Musa Musawa to look into the situation.
In a strongly worded open letter posted on X Wednesday, Kendyson on accused the LIRS of aggressively pursuing his company over disputed “creator royalty taxes,” describing the actions as an attempt to scapegoat a pioneering bootstrapped business and set a precedent that could stifle the creative economy.
Selar, founded around 2016, operates as an e-commerce and software platform enabling creators to sell digital products such as e-books, online courses, event tickets, and other content. It hosts over 400,000 creators across Nigeria and 13 other African countries, with more than two million registered users and over $26 million paid out to creators historically. The company takes a commission (reportedly around 4 percent, with much of that going to payment providers), positioning itself similarly to global platforms like Shopify or Teachable rather than a royalty-collecting intermediary.
Kendyson, who turns 30 in October 2026, highlighted that Selar has consistently met its tax obligations, fulfilling nearly nine-figure payments in 2025 alone. “We are a software company… There is no reason LIRS is hounding us for a backdated 5 percent royalty fee on all sales when we’ve clearly explained our line of business,” he wrote. He argued that complying would force the platform to raise prices, effectively “extorting” creators who already pay taxes on their own income. With net margins after payment fees often at 1-3 percent, he questioned the feasibility of absorbing or passing on such demands.
The dispute underscores broader tensions in Nigeria’s booming creator economy, which the federal government has targeted for growth through the Ministry of Art, Culture, Tourism and the Creative Economy. Minister Musawa and the administration have outlined ambitions for the sector to contribute significantly to GDP (with targets around $100 billion by 2030 in some projections) and create millions of jobs, emphasizing infrastructure, IP protection, funding access, and policy support.
Tax Framework for Creatives and Platforms
Nigeria’s tax landscape for the creative and digital sectors was significantly updated by the Nigeria Tax Act (NTA) 2025 and Nigeria Tax Administration Act (NTAA) 2025, effective January 1, 2026. These reforms consolidate previous laws, expand the tax net to include digital and virtual asset income, and introduce clearer rules for personal and corporate taxation.
Personal Income Tax (PIT) for individuals and creators is administered by state authorities, such as the LIRS in Lagos, and applies to income from digital products, royalties, commissions, and sponsorships. This tax structure includes an N800,000 annual tax-free threshold, with progressive rates reaching up to 25 percent for higher earners. Meanwhile, Companies Income Tax (CIT) targets incorporated entities, where small companies with specific turnover and asset limits may benefit from exemptions or a 0 percent tax rate under defined conditions.
Distinguishing between royalty payments and service or commission income is crucial, as royalties for the use of IP, copyrights, or software often face specific treatment, including potential withholding tax (WHT) obligations, whereas platforms facilitating sales may be categorised based on their specific business model. Furthermore, digital supplies and platforms are generally subject to a 7.5 percent Value Added Tax (VAT). In cases where records are incomplete, the LIRS actively enforces compliance through mechanisms like presumptive taxes and best-judgment assessments.
LIRS operates under these national and state laws (including the Lagos State Revenue Administration Law). It has a mandate to assess and collect taxes on income earned in or attributable to Lagos, using tools like audits, demands, and enforcement actions. Recent examples include high-profile assessments on influencers (e.g., content creator Peller’s reported N36 million dispute) and actions against various firms for defaults.
Is this a Rip-Off or Lawful Enforcement?
LIRS appears to be acting within the broad scope of the law by seeking to classify and tax Selar’s revenues appropriately. Tax authorities routinely conduct assessments based on their interpretation of a business model, especially in emerging sectors like digital platforms where distinctions between software-as-a-service (SaaS), commissions, and IP/royalty flows can be nuanced. Backdated demands and audits are common tools when discrepancies arise or records require clarification.
However, Kendyson’s complaints highlight potential overreach or misclassification risks. Selar maintains it is not a royalty-collecting entity but a technology platform earning service fees. Forcing a 5 percent “royalty fee” on gross sales could misalign with the company’s low-margin model and global comparables, potentially harming creators and the ecosystem the government claims to support. Similar grievances from other digital businesses (e.g., crypto exchanges facing large assessments) suggest a pattern of aggressive revenue drives that some view as burdensome for young, bootstrapped firms.
Nigeria’s tax reforms aim to balance compliance with growth incentives, including the Economic Development Tax Incentive (EDTI) offering credits for priority sectors (potentially including creative tech) and small business reliefs. Yet enforcement challenges, portal issues, and disputes over classification persist, creating friction for innovators.
This case arrives amid federal pushes to nurture the creative economy. Stakeholders, including the Minister’s office, may need to intervene for clearer guidelines on platform taxation to avoid chilling effects. Kendyson emphasised Selar’s CSR efforts (e.g., education initiatives) and called for support rather than hurdles, noting time spent on disputes diverts from GDP-contributing growth.
As Nigeria seeks to position itself as a creative and digital hub, resolving such disputes transparently, through dialogue, potential mediation, or policy clarification, will be critical.
Selar’s prominence makes this a bellwether for how the state balances revenue needs with fostering the very innovation and youth entrepreneurship it promotes. Both sides have legitimate stakes: legitimate tax collection on one hand, and sustainable growth for Africa’s creator economy on the other.
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