Nigeria Personal Income Tax

Residents are generally subject to tax on their worldwide income. However, foreign earnings derived by Nigerian residents are exempt from tax if the earnings are repatri­ated into Nigeria in convertible currency through a domiciliary account with an approved Nigerian bank. Income earned by a Nigerian from employment with the Nigerian government is considered Nigerian-source income, even if services are per­formed abroad. Nonresidents are subject to tax on Nigerian-source income only.

Individuals are considered residents if they are in one of the fol­lowing categories:

  • Nigerian and non-Nigerian individuals who reside in Nigeria
  • Expatriate employees of a resident company who are present in Nigeria for employment purposes
  • Expatriate employees of a nonresident company who are pres­ent in Nigeria for more than 183 days in a 12-month period
  • Expatriate employees of a non-Nigerian company if their remu­neration is recharged to a Nigerian company or borne by a fixed base in Nigeria and if they are not liable to tax in another country that has entered into a double tax treaty with Nigeria

Income subject to tax

Employment income. Taxable income includes salaries, wages, fees, allowances and pensions from past employment, as well as other gains or profits from employment, such as bonuses, premi­ums, non-cash benefits and other perquisites.

Gratuities paid to employees at the end of assignments are fully exempt from tax. Compensation for loss of office is also fully exempt from tax.

Self-employment and business income. Resident individuals who carry on a trade, business, profession or vocation are subject to tax on income derived from activities in and outside Nigeria. Self-employment income derived by nonresidents is subject to tax in Nigeria if the trade, business, profession or vocation is carried on even partly in Nigeria. However, only the gains or profits attributable to the part of the operations carried on in Nigeria are taxable.

Partners are taxed on their shares of partnership income, regard­less of whether the income is distributed.

For both residents and nonresidents, a 5% tax is withheld from contract payments, payments with respect to construction-related activities and commissions, as well as from consulting, profes­sional, management and technical fees. The recipient must include the income in his or her tax return, but may claim a credit for the tax withheld.

Taxable income is calculated by deducting allowable expenses, reliefs and losses from gross income. Resident and nonresident self-employed individuals are taxed at the rates set forth in Rates.

Investment income. Withholding tax at a rate of 10% is imposed on dividends, interest, royalties and income from the rental of mov­able or immovable property. For nonresidents, the withholding taxes are final taxes. For residents, the withholding taxes on dividends, interest and royalties are final taxes, but the withhold­ing tax on rent is treated as an advance tax payment.

Investment income earned abroad and brought into Nigeria through the Central Bank of Nigeria, or through any other autho­rized dealer appointed by the Minister of Finance, is exempt from tax.

Directors’ fees. Companies paying directors’ fees must withhold tax on the fees at a rate of 10%. For a resident, final tax is assessed when the individual files a tax return including income from all sources. For nonresidents, the 10% withholding tax is a final tax.

Capital gains. Capital gains consist of the disposal proceeds of an asset, less its cost and disposal expenses. Capital gains are taxed separately from ordinary income at a rate of 10%.

Amounts derived from the disposition of capital assets are tax­able. These assets include the following:

  • Land and buildings
  • Options, debts and other property rights
  • Any currency other than Nigerian currency
  • Any form of property created by the disposing person or other­wise coming to be owned without being acquired
  • Movable assets including motor vehicles

If these assets are located in Nigeria, they are taxable in Nigeria, regardless of where the beneficial owner is resident. Assets located outside Nigeria are taxable in Nigeria if the beneficial owner is resident in Nigeria or if he or she is a foreigner who is present in Nigeria for a period, or for an aggregate of periods, exceed­ing 183 days within a 12-month period. Capital gains derived from the disposal of capital assets located outside Nigeria, and administered by a trustee of a trust or settlement with a seat of administration outside Nigeria, are taxable if the seat of adminis­tration is transferred to Nigeria during the year of assessment and if the dis posal of the asset occurred while the seat of administra­tion was in Nigeria. For capital assets located outside Nigeria, a capital gains tax is levied on the proportionate amount of gain remitted to or received in Nigeria by nonresidents. For example, if 40% of the sales proceeds is remitted to Nigeria, 40% of the capital gain is subject to tax in Nigeria.

The taxation of gains accruing from the disposal of trade or busi­ness assets, including real property, may be deferred if the assets are replaced within one year before or after disposal.


Deductible expenses. The following expenses are deductible from employment income:

  • Approved pension funds
  • Mortgage interest on a loan to develop an owner-occupied resi­dential house

Personal allowances. Nigeria provides the following personal reliefs.

Type of allowance                                  Amount of allowance

Consolidated relief allowance                  NGN200,000 or 1% of gross

.                                                                 income, whichever is higher, plus 20% of gross income


Child allowance (up to 4)                          NGN2,500 each

Dependent relative

allowance (up to 2)                                     NGN2,000 each

Life insurance premiums

(self or spouse)                                            No limit


Any expenses proved to the

satisfaction of the relevant

tax authority to have been

incurred by the individual on

research during the period,

including the amount of levy

paid to the National Agency

for Science and Engineering

Infrastructure Act                                       No limit


An allowance for a child may not be claimed by more than one taxpayer. However, a husband and wife may make separate claims for other allowances.

Business deductions. Expenses are deductible if they are reason­able and are incurred wholly, exclusively and necessarily in pro­ducing income. Expenses of a capital, private or domestic nature are not deductible.

Allowable expenses include the following:

  • Interest on money borrowed and employed as capital in acquir­ing income
  • Rental payments on business premises
  • Repair and maintenance expenses
  • Salaries, wages, allowances, utility costs and insurance premiums
  • Bad debts

Any loss incurred in a previous year is deductible from the income of the same trade or business for up to four years.

Rates. The following rates apply to residents and nonresidents.

Taxable income Rate Tax Cumulative tax
First 300,000 7 21,000 21,000
Next 300,000 11 33,000 54,000
Next 500,000 15 75,000 129,000
Next 500,000 19 95,000 224,000
Next 1,600,000 21 336,000 560,000
Above 3,200,000 24

Minimum tax of 1% of gross income is due, even if applicable reliefs reduce tax liability beneath that level.

The following deductions and exemptions apply:

  • Contribution to Nigerian Pension Scheme
  • Contribution to National Health Insurance Scheme
  • Contribution to National Housing Fund
  • Interest paid on loan in respect of owner-occupied residential home
  • Compensation for loss of office

Individuals whose annual taxable income is NGN30,000 or less are exempted from the requirement to file a tax return.

Relief for losses. Business losses of a self-employed person may be carried forward for four years. Loss carrybacks are not allowed.

Inheritance and gift taxes

Nigeria does not impose inheritance and gift tax.

Social security

Pension. The mandatory minimum contribution to the Nigerian Pension Scheme is 18% of an employee’s monthly emoluments. Employers and employees must make contributions of 10% and 8%, respectively. Monthly emoluments are total emoluments as may be defined in the employee’s employment contract but can­not be less the sum of basic salary, housing allowance and trans­port allowance.

In addition to the above contributions, employees may make voluntary contributions to their retirement savings accounts. An employer may agree to the payment of additional benefits to the employee on retirement or elect to bear full responsibility for the scheme provided that the employer’s contribution is not less than 20% of the monthly emoluments of the employee. In addition, every employer must maintain a group life insurance policy in favor of each employee for a minimum of three times the annual total emoluments of the employee. The premium must be paid not later than the date of commencement of coverage.

National Housing Fund. Nigerian employees earning a minimum of NGN3,000 per year (approximately USD19) must contribute 2.5% of their basic salary to the National Housing Fund.

Tax filing and payment procedures

The federal government is responsible for enacting individual in come tax legislation. The Internal Revenue office in each state administers and collects taxes from taxable residents. The federal government collects taxes from the armed forces, police personnel, External Affairs Officers and residents of the Federal Capital Territory, as well as tax levied on non residents for income derived from Nigeria.

The tax year in Nigeria is the calendar year. Income tax is assessed on employment income on a current-year basis. Tax on income from a trade, business, profession or vocation is assessed on a preceding-year basis, except for the first three and the last two years of assessment. The basis period is the financial year chosen for the trade, business, profession or vocation. Investment income and other income are also assessed on a preceding-year basis.

Employers are obliged to file annual returns in respect of an assessment year for employees not later than 31 January of the following assessment year. Other individual taxpayers must file a tax return within 90 days after the beginning of each year of assess­ment. Individuals with annual taxable income of NGN30,000 or less are not required to file tax returns.

Like residents, nonresidents must account for all income in their tax returns, and they may claim a credit for most taxes withheld.

Tax on employment income is paid by withholding from salary under the Pay-As-You-Earn (PAYE) system. For business income, the tax due must be paid within 60 days after the receipt of an assessment notice from the Internal Revenue.

Married persons are taxed separately, not jointly, on all types of income.

Double tax relief and tax treaties

Foreign tax paid on income brought into Nigeria through the Central Bank of Nigeria, or through any other authorized dealer approved by the Minister of Finance, may be credited against tax payable in Nigeria on the same income.

Nigeria has entered into double tax treaties with the following countries.

Belgium                            France                        Philippines

Canada                              Mauritius                    Romania

China                                Netherlands                South Africa

Czech Republic                 Pakistan                      United Kingdom

Entry Visas

Nigerian missions abroad issue various types of entry visas to bona fide businesspersons, expatriates, visitors and tourists. Entry visas are usually issued for a single entry into Nigeria, but multiple-entry visas may be issued with respect to tourist and business visas, at the discretion of the Nigeria missions abroad.

The various entry visas include transit visas issued to individuals who are passing through Nigeria en route to other destinations, but expect to stay in the country for up to seven days. Individuals in direct transit or whose transition period does not exceed 48 hours do not need transit visas.

Tourist visas are issued to applicants coming to Nigeria to visit families and friends or for tourism. The visitor’s stay in Nigeria can be extended subject to the approval of Nigeria Immigration Service (NIS), and relevant statutory fees may apply.

Business visas are issued to business visitors and investors com­ing to Nigeria for business discussions or meetings. Any form of work-related activity is prohibited for holders of this visa. An extension of stay in Nigeria is permissible subject to NIS approv­al, and relevant statutory fees may apply.

The government introduced the Visa on Arrival (VOA) program to promote foreign direct investment in Nigeria. The VOA pro­gram facilitates the expedited entry into Nigeria for top execu­tives of multinationals and other high net worth investors. The approval of this facility is at the sole discretion of the Comptroller General of NIS.

Temporary work permit (TWP) visas are usually issued to expa­triates with a specialized or project-specific purpose for coming to Nigeria. The visa is usually valid for up to three months, depending on the approval period granted by the Comptroller General of NIS. An extension of stay in Nigeria is permissible subject to NIS approval, and relevant statutory fees may apply.

The subject-to-regularization (STR) visa is issued to expatriates coming to work and live in Nigeria on a long-term basis. It is usually valid for up to a 90-day period within which the expatri­ate initiates an application for regularization of stay.

Work permits and self-employment

The government through its relevant agencies highly regulates the employment of expatriates in Nigeria to ensure that the right skills are imported and, at the same time, promote employment opportunities for qualified Nigerians. Applications for entry visas into Nigeria are screened for security and foreign direct investment purposes.

The TWP visa application process is initiated in Nigeria by obtaining a TWP cable approval from the headquarters of NIS. Specific information about the expatriate, including a copy of the international passport data page, the nature of assignment to be performed and country of visa application must be well articu­lated in the application. On approval of the Comptroller General of NIS, a TWP cable approval is issued for presentation at the relevant Nigeria mission abroad.

The following documents are usually required to process a TWP visa application:

  • The telex from the Comptroller-General of the Nigeria Immigra tion Service approving the grant of the TWP
  • Proof of financial means or written confirmation by the Nigerian company that it will provide financing and be respon­sible for any necessary immigration responsibilities for the journey
  • Curriculum vitae of the expatriate
  • Photocopy of the bio-data page of the expatriate’s international passport
  • Documentary evidence showing the nature of the job to be performed by the expatriate
  • Company’s profile
  • Copy of certificate of incorporation
  • Copy of business permit

Certain countries, such as the Philippines, require the contract of engagement between the company and the expatriate to be authenticated by the Ministry of Foreign Affairs in Nigeria.

Companies that require the services of foreign nationals for per­manent or long-term employment must apply to the Federal Ministry of Interior in Abuja, requesting Expatriate Quota (EQ) for specific positions as well as a business permit for non-indigenous companies On approval, companies are able to bring in their qualified expatriate assignees to Nigeria on the STR visa platform (see Section F).

Foreign nationals taking up employment in Nigeria are classified into the following categories for visa application purposes:

  • Individuals taking up employment in Free Trade Zones in Nigeria. This category is not subject to EQ conditions.
  • Individuals taking up employment with partially government-owned organizations and private sector companies and organiza­tions. This category is subject to EQ conditions.

Expatriates coming to Nigeria for employment under the above categories must apply for entry visas through Nigerian missions abroad. The Nigerian missions may issue entry visas, including STR visas (see Section F).

Applications for STR visas must be supported with the following documents, duly stamped by the Nigerian embassy in the home country of the expatriate applicant:

  • Three copies of the visa and entry permit application form (Form IMM/22)
  • Three copies of the résumé and educational certificates
  • A copy of the letter of employment offer
  • A copy of the letter of acceptance of the employment offer
  • Copies of the company’s business permit and EQ approval letter
  • An extract of minutes of the meeting at which the appointment was made (that is, the Board of Directors’ Resolution) if the position is director
  • A copy of the company’s introduction or reference letter to the Nigerian Embassy in the applicant’s country of residence, which confirms the employment

Requirements may vary slightly among Nigerian embassies in different countries.

STR visas are granted for three months. The required documents must be approved and endorsed by the Nigerian embassy abroad and given to the expatriate in a sealed envelope, for presentation to the NIS on the expatriate’s arrival in Nigeria. The Nigerian company must present these documents to the NIS together with a Combined Expatriate Residence Permit and Alien Card (CERPAC form) usually referred to as a temporary residence permit and an application letter for “Regularization of Stay.” On approval of the Comptroller General of NIS, a permanent resi­dence permit (Green Card) is issued.

The Comptroller-General of the NIS abolished the use of re-entry visas (single and multiple re-entry visas) by resident expatriates, effective from 6 March 2015. Consequently, resident expatriates can commute in and out of Nigeria based on endorsed CERPAC forms or Green Cards. Expatriates employed in Nigeria are issued CERPAC forms on application for regularization of stay, which must be made within three months of arrival in the coun­try. Permanent resident permits (Green Cards) are issued on completion of this process.

Expatriates may transfer from one company to another if the prior consent of the NIS is obtained. To obtain consent, the previous employer must signify in writing it has no objection to the change of employment, and the new company applies to the NIS for the transfer of the expatriate.

Economic Community of West African States (ECOWAS) nationals are exempted from EQ conditions and are only required to obtain ECOWAS residence cards for work purposes.

Foreign nationals may establish businesses in Nigeria and own up to 100% of the share capital of their companies. Companies that are partly or wholly owned by foreign nationals must be registered with the Nigerian Investment Promotion Commission or the FMI in Abuja after incorporation.

Family and personal considerations

Family members. Family members of expatriates must show evi­dence of their relationships, including marriage certificates and birth certificates. Dependents above 16 years of age are also issued CERPAC forms. Dependent minors are issued “Minor” immigration status endorsements, subject to the validity of their parents’ residence permits. This allows them travel in and out of the country. Dependent minors are permitted to attend public or private schools.

A dependent with CERPAC status may be employed by a Nigerian company if he or she is at least 18 years of age, with requisite academic qualifications and if the company has vacant expatriate quota positions. An application is forwarded by the Nigerian company to the NIS with copies of the applicant’s résumé and academic professional certificates. On NIS approval of the application, the status of the applicant is upgraded from the status of dependent to principal residence expatriate.

Driver’s permits. Foreign nationals are not permitted to drive legally in Nigeria with their home country driver’s licenses. They must have international driver’s licenses or prove that they have applied for Nigerian driver’s licenses.

Nigeria does not have driver’s license reciprocity with any other country. Foreign nationals must apply for Nigerian driver’s licenses after obtaining their residence permits.

The following documents must be submitted with an application form and payment of the necessary fee to obtain a driver’s license:

  • A copy of the residence permit
  • A copy of the foreign driver’s license
  • Two passport-size photographs
  • The applicant’s blood group
  • Evidence of good eyesight

No actual driving test is required of a license applicant. However, a physical examination is conducted if considered necessary by the issuing authority.