By Epiphanus Obia
Selar founder and chief executive officer Douglas Kendyson on Wednesday, 15th July, publicly accused the Lagos Internal Revenue Service (LIRS) of wrongly pursuing the company for backdated royalty taxes, arguing that the demand could increase costs for creators and discourage growth in Nigeria’s digital economy.
In a post on X addressed to Lagos State Governor Babajide Sanwo-Olu and Minister of Arts, Culture, Tourism and Creative Economy Hannatu Musawa, Kendyson said Selar had met its tax obligations over the years but was now being asked to pay what he described as a five per cent backdated royalty fee on transactions processed through its platform.
He argued that Selar is a software company that provides e-commerce infrastructure for creators rather than a royalty-based business.
As of publication, LIRS had not publicly responded to Kendyson’s claims.
What is Selar?
Selar is a Nigerian technology company that enables creators, educators and entrepreneurs to sell digital products, courses, memberships and other online services.
According to Kendyson, the platform serves more than 400,000 creators across Nigeria and 13 other African countries.
Rather than earning income from royalties paid to creators, he said Selar charges a commission of about four per cent on transactions, with a significant portion going to payment providers.
Why the dispute about “royalty”?
The disagreement appears to centre on how Selar’s business model should be classified for tax purposes.
Kendyson argued that Selar merely provides software that allows creators to sell online, making its business comparable to international e-commerce platforms such as Shopify and Teachable.
Based on that position, he said the company should not be treated as earning royalty income or be required to pay what he described as a backdated 5% royalty tax on sales processed through the platform.
LIRS has not publicly explained its position, making it unclear how it classified the company’s activities or the legal basis for the alleged demand.
Why LIRS’s demand is a problem according to Selar
According to Kendyson, complying with the alleged demand would force Selar to increase fees charged to creators.
He argued that creators already pay taxes on their own income and that absorbing an additional five per cent levy would be difficult because Selar retains only a small share of each transaction after payment processing costs.
He also said resources that could be invested in growing the business are instead being spent resolving the dispute.
Why this matters beyond Selar
The dispute highlights broader questions about how Nigeria’s tax system applies to digital platforms and creator economy businesses.
As more Nigerian companies build software for creators, educators and online merchants, questions may arise over whether such businesses should be taxed as software providers, marketplaces or royalty-related businesses.
The outcome of the dispute could influence operating costs for similar platforms and, ultimately, the fees paid by creators who rely on them.
What happens next?
For now, many questions remain unanswered.
LIRS has yet to publicly respond to Kendyson’s allegations or explain whether it considers Selar’s business model subject to royalty-related taxes.
Until the agency provides its position, it is not possible to determine whether the disagreement stems from differing interpretations of tax law, the classification of Selar’s services or another regulatory issue.