Tax for remote workers in Nigeria: what the Nigeria Tax Act 2025 changed

What changed in 2026

Nigeria replaced most of its tax laws in one go. Four Acts were signed on 26 June 2025: the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board of Nigeria (Establishment) Act. The Nigeria Tax Act took effect on 1 January 2026.

For individuals, the main changes are these:

• The Personal Income Tax Act is repealed, and personal income tax now sits in the Nigeria Tax Act.
• There are new tax bands, with a tax-free first ₦800,000.
• The consolidated relief allowance (CRA) is abolished. A rent relief of 20% of rent paid, capped at ₦500,000, takes its place.
• Every taxable person must have a Tax ID, and for individuals it's linked to your NIN.
• The Federal Inland Revenue Service became the Nigeria Revenue Service (NRS).

Is your foreign income taxable in Nigeria?

Yes, if you're resident. The Act says the income of a Nigerian resident is "chargeable to tax in Nigeria wherever they arise, and whether or not the income, profits or gains have been brought into or received in Nigeria." So keeping your dollars in a Payoneer or Grey balance doesn't change anything.

You count as resident if any one of these applies to you:

• you're domiciled in Nigeria;
• you have a permanent place available for your use in Nigeria;
• Nigeria is your place of habitual abode;
• you have substantial economic and immediate family ties in Nigeria;
• you spend 183 days or more in Nigeria in a 12-month period.

For almost everyone reading this, working from Lagos, Abuja, Ibadan or anywhere else in the country, that means you're resident.

There is still an exemption for foreign income brought in through approved channels, but under the new Act it covers only dividends, interest, rent and royalties. Salary, contractor fees and freelance income are not on that list. PwC also notes that interest on foreign currency domiciliary accounts is no longer exempt.

If the foreign country already taxed the same income, PwC says the foreign tax may be credited against your Nigerian tax. That's rare for contractors, because most foreign clients don't deduct tax from payments to people abroad.

The new rates

These are the personal income tax bands in the Nigeria Tax Act, applied to your taxable income for the year (1 January to 31 December):

A worked example, to show how the bands stack. Say your remote income comes to ₦12,000,000 for the year, after converting it to naira, and you claim no reliefs:

• First ₦800,000: ₦0
• Next ₦2,200,000 at 15%: ₦330,000
• Next ₦9,000,000 at 18%: ₦1,620,000
• Total tax: ₦1,950,000, about 16% of your income

If you paid ₦1,500,000 in rent that year, rent relief takes 20% of it (₦300,000) off your taxable income. That saves ₦54,000 at the 18% rate, bringing the bill to ₦1,896,000.

People earning the national minimum wage or less from an employment are exempt.

Reliefs and deductions you can claim

The Act lists these as eligible deductions for individuals:

• your National Housing Fund contributions;
• National Health Insurance Scheme contributions;
• pension contributions under the Pension Reform Act;
• interest on a loan to build or buy a home you live in yourself;
• life insurance or deferred annuity premiums for you or your spouse;
• rent relief: 20% of the rent you pay, up to ₦500,000, as long as you declare the actual rent.

You claim them in writing in the form your state tax authority asks for, so keep your tenancy agreement, rent receipts and pension statements.

Contractors don't get pension deductions automatically, because no employer is contributing for you. Any contributions you make yourself under the Pension Reform Act do count.

Who you pay: your state, not the NRS

Under the Nigeria Tax Administration Act, the tax authority of your state (or the FCT) handles tax for resident individuals. If you live in Lagos, that's the Lagos State Internal Revenue Service. The NRS deals with companies, non-residents earning from Nigeria and a few special groups.

PAYE or self-assessment: which one applies to you

How you're hired decides who does the work. We explain the difference between the two in contractor vs employee.

Employed through an employer of record

If a foreign company employs you through an employer of record (EOR) such as Remote or Deel, the EOR is your legal employer in Nigeria. Remote, for example, says it owns its own legal entity in Nigeria and handles withholding obligations. In practice that means PAYE is deducted from your pay before you receive it.

You still have a job to do: the Act says an employee "shall file an annual return of income from all sources", so you file a return too, and declare any side income.

Contractor, freelancer, or paid directly from abroad

If you invoice a foreign client, or a foreign company pays you directly with no Nigerian entity, nobody deducts tax for you. You must:

1. register with your state IRS and get your Tax ID;
2. keep records of every payment: invoices, contracts, platform statements (Deel, Upwork, Payoneer) and bank statements;
3. file an annual return with a self-assessment form, showing income from every source and how you worked out the tax;
4. pay by the due date, in one sum or in instalments if your state allows.

PwC's summary says individual returns are due within 90 days of the end of the tax year, which is 31 March. If you have business income, the return should include a statement of accounts.

A useful habit: each time a payment lands, move 15% to 20% of it into a separate naira or dollar balance for tax. Then the March bill doesn't come as a shock.

Your Tax ID

Every taxable person must register with their tax authority and get a Tax ID. For individuals it's linked to your NIN. The FCT Internal Revenue Service says you can find yours at taxid.nrs.gov.ng: choose Individual, pick NIN, enter your 11-digit NIN, name and date of birth exactly as NIMC holds them, and your 13-digit Tax ID is shown.

The Act says banks and other financial institutions should make a Tax ID a condition for opening or operating an account. The same FCT-IRS notice says the Tax ID "will not lead to bank account deductions or closures due to non-compliance". Get yours anyway: it takes minutes.

VAT, crypto and penalties

VAT on services to foreign clients

Services you provide to a non-resident outside Nigeria count as exported services, which are zero-rated: 0% VAT. Small businesses (turnover of ₦100 million or less) are exempt from VAT registration and returns, but the Act's definition excludes businesses providing professional services. If you run a registered consultancy, ask a tax adviser whether you need to register for VAT, even though you'd charge 0% on exports.

Paid in crypto

Being paid in USDT or USDC doesn't take you outside the rules. The Act brings digital and virtual assets into tax, and crypto received as pay is taxable, valued at the market price when you receive it.

Penalties

The Tax Administration Act sets fines for failing to register (₦50,000 in the first month and ₦25,000 for each month after) and for failing to file or filing incorrect returns (₦100,000 in the first month and ₦50,000 for each month after), on top of the tax itself.

Frequently asked questions

Do I pay tax in Nigeria if I'm paid in dollars from abroad?

Yes, if you're resident in Nigeria. Under the Nigeria Tax Act 2025, a resident's income is taxable wherever it comes from and whether or not it's brought into Nigeria. You convert it to naira and apply the normal bands.

Is foreign income still tax-free if it comes through approved channels?

Only for dividends, interest, rent and royalties. Salary, contractor fees and freelance income are taxable even if they come through a bank or approved channel.

How much income is tax-free in Nigeria in 2026?

The first ₦800,000 of taxable income a year is taxed at 0%. Minimum wage earners are exempt altogether.

Which office do I file with as a remote worker in Lagos?

The Lagos State Internal Revenue Service. Resident individuals file with their own state's tax authority, not the Nigeria Revenue Service.

Do I need a Tax ID if I already have a NIN?

Yes, but it's linked to your NIN. You can look up your 13-digit Tax ID on the NRS Tax ID portal using your NIN, name and date of birth.

Does Deel or Remote pay my tax for me?

If they employ you as an employer of record, yes: PAYE is deducted from your salary. If you're a contractor on Deel or Remote, no. They pay you in full and you handle your own tax.

Sources

• Nigeria Tax Act, 2025 (approved copy for print, hosted by Premium Times)
• Nigeria Tax Administration Act, 2025 (approved copy for print, hosted by Premium Times)
• Nigeria Tax Act 2025: publication and commencement dates, judy.legal
• The tax reform Acts, AllAfrica, 4 January 2026
• Nigeria: taxes on personal income, PwC Worldwide Tax Summaries, reviewed 29 May 2026
• Nigeria: individual overview, PwC Worldwide Tax Summaries
• Nigeria: residence, PwC Worldwide Tax Summaries
• Nigeria: tax administration, PwC Worldwide Tax Summaries
• Nigerian Tax ID portal goes live, FCT Internal Revenue Service, 29 December 2025
• Employ in Nigeria, Remote
• Replacement of FIRS with NRS will overhaul revenue administration, AllAfrica (NAN), 7 January 2026