Nigeria · Tax
Key Facts
- —Who pays Nigeria taxes residents on worldwide income, and residence turns on days, home, habitual abode or family and economic ties.
- —What the rates are Six bands from zero to 25 percent, starting with nothing on the first 800,000 naira a year, about US$602.
- —When it is due Employers remit pay-as-you-earn by the 10th of the following month and file an annual return by 31 January.
- —Who collects it Your state of residence collects, not the federal service, unless you live in Abuja or earn Nigerian income as a non-resident.
- —What changed in 2026 Four acts signed in June 2025 took effect on 1 January 2026, and the federal revenue service was renamed.
- —The catch The consolidated relief allowance is gone. Rent relief replaces it, capped at 500,000 naira, about US$377, and only for renters.
Four new tax acts took effect on 1 January 2026 and the federal collector changed its name. The residence test, not the passport, still decides who pays.
Taxes in Nigeria for expats begin with a test of residence, not a test of nationality. A passport decides nothing here.
Naira figures here convert at 1,327.88 naira to US$1, the mid-market rate on 17 September 2026. The currency moves, so read the dollar figures as a scale.
The residence test and the limb that was added
PwC sets the test out as a list of alternatives. You are resident if any single one of them applies to you.
The limbs are domicile in Nigeria, a permanent home available for use, and a place of habitual abode. Presence of at least 183 days in any 12-month period counts too, including temporary absences.
Two further limbs complete the list. Substantial economic or immediate family ties in Nigeria, and service as a Nigerian diplomat abroad.
Non-residence requires all of those to be absent at the same time. That is a high bar for anyone with a family or a business in the country.
The ties limb is the reform’s real expansion. EY summarises it as treating people with strong economic or immediate family ties to Nigeria as tax residents.
Residents are taxed on worldwide income. Employment income is Nigerian-sourced when the employee is resident and the duties are performed wholly or partly in Nigeria.
How pay-as-you-earn is actually collected
Employment tax runs through pay-as-you-earn, deducted at source by the employer. It is remitted on or before the 10th day of the month after salaries were paid.
The employer then files an annual return covering all employees by 31 January. That return covers the preceding calendar year.
Individuals file their own self-assessment within 90 days of the year ending on 31 December. In practice that means a deadline of 31 March.
Penalties for late remittance are not set out in the published rate tables. Ask the collecting authority for the current figure before assuming a number.
The bands that took effect on 1 January 2026
The rules on taxes in Nigeria for expats changed on 1 January 2026. KPMG’s reading of the Nigeria Tax Act sets out six bands.
The first 800,000 naira, about US$602, is taxed at zero. The next 2,200,000 naira, about US$1,657, is taxed at 15 percent.
The next 9,000,000 naira, about US$6,778, is taxed at 18 percent. The next 13,000,000 naira, about US$9,790, is taxed at 21 percent.
The next 25,000,000 naira, about US$18,827, is taxed at 23 percent. Everything above 50,000,000 naira, about US$37,654, is taxed at 25 percent.
EY describes the result as a range of zero to 25 percent, and PwC gives the same span. The zero band is a band, not a separate exemption.
The relief that was removed and the one that replaced it
The consolidated relief allowance is gone. It was a standing deduction that reduced taxable pay for everyone, regardless of housing.
Under the old regime it was the higher of a fixed naira amount or one percent of gross income. Twenty percent of gross income was then added on top.
Its replacement is rent relief. That is the lower of 500,000 naira, about US$377, or 20 percent of the annual rent actually paid.
The relief is conditional on declaring the rent you paid. It is available only to people who rent, which leaves owner-occupiers with nothing in its place.
Other deductions survive. Housing fund and health insurance contributions, life assurance premiums, deferred annuities, pension contributions and interest on a loan for an owner-occupied home.
The four acts and the commencement date
President Bola Tinubu signed four tax acts on 26 June 2025. Two of them set the rules, the Nigeria Tax Act and the Nigeria Tax Administration Act.
The other two build the machinery. The Nigeria Revenue Service Establishment Act creates the new collector, and the Joint Revenue Board Establishment Act governs federal and state coordination.
All four took effect on 1 January 2026. Andersen, EY and BDO all give that date, and the federal government kept it after the National Assembly ordered a re-gazette.
The Federal Ministry of Finance issued transition guidelines to cover the changeover. The Nigeria Tax Act itself consolidates five older statutes into a single law.
Those are the acts on companies income tax, capital gains tax and personal income tax. Stamp duties and value added tax are folded in as well.
The collector has a new name
The Federal Inland Revenue Service became the Nigeria Revenue Service with effect from 1 January 2026. Zacch Adedeji is its executive chairman.
The change is more than a sign on a building. The new service has a mandate covering non-tax revenue as well as tax, and is described as more autonomous and more digital.
Value added tax and what happened to capital gains
Value added tax stands at 7.5 percent. It rose from 5 percent on 1 February 2020, and the Nigeria Tax Act retains the rate on taxable supplies.
Zero-rated and exempt supplies include basic food, medical products, educational materials, fertilisers and locally produced animal feed. Exported goods other than oil and gas are also covered.
Capital gains changed shape completely, falling into total income and taxed at the progressive rates of zero to 25 percent. That replaces the previous flat 10 percent charge.
Share disposals carry their own exemptions. Two limbs are measured across 12 consecutive months and both must hold.
Proceeds must stay under 150,000,000 naira, about US$112,962. The gains themselves must not exceed 10,000,000 naira, about US$7,531.
Reinvestment shelters part of a gain as well. Where proceeds go back into Nigerian company shares in the same year of assessment, only the non-reinvested portion is taxed.
Tax taken before the money reaches you
Deduction at source is governed by the withholding regulations of 2024. PwC dates their effect to 1 July 2024, with the gaming sector following on 1 October 2024.
A second account puts parts of the regime at 1 January 2025. The start date is not settled, so check which version governs a contract before relying on either.
Dividends and interest are deducted at 10 percent across every category of payee. Royalties are 10 percent for companies and 5 percent for individuals.
Rent, commission, consultancy and professional fees are deducted at 5 percent for residents and 10 percent for non-residents. Construction of roads, bridges, buildings and power plants is 2 percent for residents.
Small companies need not deduct at all in smaller transactions. The exemption applies where the value is under 2,000,000 naira, about US$1,506, and the vendor holds a valid tax identification number.
The state you live in is the state that taxes you
Taxes in Nigeria for expats are administered in two places at once. Federal law sets the rules, and a state service usually collects the money.
The state internal revenue service collects from most individuals. It is also the body that issues your tax clearance certificate.
The federal service collects from a short list of exceptions. Armed forces and foreign service personnel, residents of the Federal Capital Territory, and non-residents with Nigerian-source income.
The practical effect is geographic. An expatriate living in Lekki is a Lagos State taxpayer, while one living in Abuja files federally.
A non-resident consultant paid from Nigeria is a federal taxpayer wherever the client sits. Moving house across a state line moves your file with you.
Pension, the housing fund and a levy that never launched
Pension contributions are mandatory for employers with 15 or more employees. The minimum total contribution is 18 percent of monthly emolument.
The employer puts in at least 10 percent and the employee at least 8 percent. Where the employer bears the whole contribution, the minimum rises to 20 percent.
The national housing fund takes 2.5 percent of monthly income. Private-sector employees are now outside compulsory compliance and may contribute voluntarily, while public-sector employees must still comply.
Whether expatriates are excluded from the housing fund by law is asserted by practitioners rather than settled in statute here. Treat pay-as-you-earn and pension as certain and put the rest to your payroll provider.
The expatriate employment levy is the other thing worth knowing. It launched on 27 February 2024, at US$15,000 a year for each expatriate director and US$10,000 for each other expatriate employee.
The employer would have paid, triggered at 183 cumulative days in a fiscal year. It was suspended on 8 March 2024 after a meeting with the interior ministry and business groups.
As at 6 July 2026 it remained suspended and unpublished. Check the interior ministry portal before putting it into a budget.
What a foreign employer has to work out
A foreign employer with no Nigerian entity faces the least settled part of all this. What is clear is the split of collecting authority.
Non-residents with Nigerian-source income fall to the federal service rather than to a state one. Pay-as-you-earn obligations attach to the employer of a Nigerian-resident employee.
How a company with no local presence discharges that obligation is not stated cleanly in the reform acts as reported. The mechanism is a choice between establishing a Nigerian presence and engaging a local payroll intermediary.
Double taxation treaties may soften the outcome. Nigeria has treaties with 15 countries, among them the United Kingdom, France, the Netherlands, Canada, China, Singapore, Spain, Sweden and South Africa.
Unilateral relief gives credit for foreign tax paid, capped at the lower of two amounts. Those are the Nigerian tax on that income and the foreign tax actually paid.
Treaty relief requires ratification by the National Assembly. It applies only to Nigerian residents in the relevant year, with the same cap on the credit.
The first tax year, month by month
Start by establishing where you are resident inside Nigeria, not only whether you are resident at all. That determines which office issues your tax clearance certificate.
Ask your employer which state it remits to, and check that the address on file matches where you live. A mismatch surfaces later, when the certificate is needed.
Keep a rent receipt and a declaration of rent paid if you rent your home. Without them the rent relief cannot be claimed at all.
Value benefits in kind correctly from the start. Accommodation is taxed on annual rental value, capped at 20 percent of annual gross employment income.
A company vehicle is valued at 5 percent of the cost of the vehicle. Getting this wrong surfaces later, in an assessment you did not budget for.
Canteen meals, uniforms, protective clothing and work tools are not taxable. Those exclusions are worth raising when a package is negotiated.
Diarise three dates and treat them as fixed. The 10th of each month for remittance, 31 January for the employer return, and 31 March for your own.
Then keep every conversion on record. Foreign income is taxable once you are resident, and the credit for foreign tax has to be evidenced.
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Sources: Andersen Nigeria on the four 2025 tax reform acts, KPMG Nigeria on the new personal income tax bands, PwC Worldwide Tax Summaries on the Nigerian residence test, PwC on filing deadlines and state collection, PwC on rent relief and allowable deductions, PwC on value added tax, pension and the housing fund, PwC Nigeria on the deduction at source regulations, EY on the Nigeria Tax Act highlights, The Guardian Nigeria on the Nigeria Revenue Service transition, National Law Review on the suspended expatriate employment levy
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