Verified Facts
The tax rates in Nigeria range from 7% to 24% for personal income tax, with a corporate tax rate of 30% and a value-added tax (VAT) rate of 7.5%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Nigeria operates a territorial taxation system, where tax is levied on income earned within the country, regardless of the taxpayer's residency status. However, residents are also taxed on their worldwide income, with credits available for taxes paid in other countries. The residency rules for tax purposes in Nigeria are based on physical presence, with individuals considered resident if they are present in the country for at least 183 days in a tax year. Other factors, such as the location of their permanent home, family, and business interests, may also be taken into account.
The tax system in Nigeria is administered by the Federal Inland Revenue Service (FIRS), which is responsible for collecting taxes, as well as providing guidance and support to taxpayers. The tax year in Nigeria runs from January to December, and taxpayers are required to file their tax returns by the end of March in the following year. Nigeria has a network of double taxation treaties with several countries, which aim to prevent taxing the same income in multiple jurisdictions.
Personal Income Tax
| Income Bracket (NGN) | Tax Rate |
|---|---|
| 0 - 300,000 | 7% |
| 300,001 - 600,000 | 11% |
| 600,001 - 1,200,000 | 15% |
| 1,200,001 - 2,400,000 | 19% |
| 2,400,001 and above | 24% |
| Personal income tax in Nigeria is levied on the chargeable income of individuals, which includes employment income, business profits, and investment income. Taxpayers are entitled to various deductions and allowances, such as a personal allowance, mortgage interest relief, and donations to charities. Tax returns must be filed electronically, and taxpayers are required to pay their taxes in installments throughout the year. |
Corporate & Business Tax
- The corporate tax rate in Nigeria is 30%, although small businesses with an annual turnover of less than NGN 25 million may be eligible for a reduced rate of 20%.
- Small business incentives are available, such as exemptions from certain taxes and levies, as well as access to financing and training programs.
- Nigeria has several free zones, which offer tax exemptions and other incentives to businesses operating within these areas.
- Companies are required to register with the Corporate Affairs Commission and obtain a tax identification number (TIN) before commencing business.
- Value-added tax (VAT) registration is also compulsory for businesses with an annual turnover of NGN 25 million or more.
VAT / Sales Tax
- The standard VAT rate in Nigeria is 7.5%, although some goods and services are subject to reduced rates or exemptions.
- Reduced rates apply to certain basic necessities, such as food, healthcare, and education.
- Exemptions are available for certain goods and services, such as agricultural products, medical equipment, and financial services.
- A tourist refund scheme is available, allowing foreign visitors to claim a refund of VAT paid on certain purchases.
For Expats & Foreign Workers
- Tax residency rules for expats are based on physical presence, with individuals considered resident if they are present in the country for at least 183 days in a tax year.
- Nigeria has double taxation treaties with several countries, which aim to prevent taxing the same income in multiple jurisdictions.
- Expats are required to register with the tax authorities and obtain a TIN before commencing work in Nigeria.
- Social security contributions are compulsory for expats, although some countries have reciprocal agreements with Nigeria.
- Remittance rules apply to expats, with restrictions on the amount of money that can be transferred out of the country.
- Expats may be eligible for tax credits or reliefs, such as the foreign earned income exclusion or the foreign tax credit.
Crypto & Investment Income
- Investment income, such as dividends, interest, and rentals, is subject to tax in Nigeria.
- Capital gains tax is levied on the disposal of assets, such as shares, property, and investments, at a rate of 10%.
- Cryptocurrency is considered a taxable asset in Nigeria, with gains subject to capital gains tax.
- Tax deductions are available for investment-related expenses, such as brokerage fees and interest on loans.