Tax in Nigeria

Who is the tax authority and where do filings live?

The Federal Inland Revenue Service (FIRS) under the Federal Ministry of Finance is the principal Nigerian federal tax authority [SC1]. FIRS administers Federal Personal Income Tax (administered jointly with State Internal Revenue Services, with state-IRS as primary collector for resident individuals), Companies Income Tax (CIT), Petroleum Profits Tax (PPT) and successor regime under Petroleum Industry Act 2021, Value-Added Tax (VAT), Stamp Duties, and Tertiary Education Tax (TET). State Internal Revenue Services administer state-level Personal Income Tax for state-resident individuals (Nigeria's 36 states + FCT each operate a separate SIRS — Lagos State Internal Revenue Service is the largest by volume, followed by Rivers, Kaduna, FCT-IRS, and Kano). Local Government Authorities administer specific local taxes (tenement rates, sanitation fees, hawker permits) under the Taxes and Levies (Approved List for Collection) Act. Tax disputes proceed through the Tax Appeal Tribunal (TAT) at federal level + state-level tribunals + Federal High Court appeal path + Court of Appeal + Supreme Court. ICAN-licensed Chartered Accountants (Institute of Chartered Accountants of Nigeria) + ANAN (Association of National Accountants of Nigeria) are the principal credentialed accounting professions; CITN (Chartered Institute of Taxation of Nigeria) regulates Chartered Tax Practitioners with statutory recognition under the CITN Act of 1992. The Joint Tax Board (JTB) coordinates federal-state tax-policy alignment. Substantive law: Personal Income Tax Act (PITA, Cap P8 LFN 2004 with successive Finance Act amendments through 2024), Companies Income Tax Act (CITA, Cap C21 LFN 2004 with Finance Act amendments), VAT Act (Cap V1 LFN 2004 with Finance Act amendments), Petroleum Industry Act 2021 (replacing Petroleum Profits Tax Act for new licences), Capital Gains Tax Act (Cap C1 LFN 2004), Stamp Duties Act (Cap S8 LFN 2004), Federal Inland Revenue Service Establishment Act 2007, and the Finance Acts 2019/2020/2021/2022/2023/2024 (annual fiscal-package legislation). The post-2023 Tinubu administration tax-reform packages — including the Tax Administration Bill, the Tax Bill, the Joint Revenue Board Bill, and the Nigeria Revenue Service Bill — have been progressively advanced through the National Assembly, with major restructuring proposed including FIRS rebranding to 'Nigeria Revenue Service' (NRS), unified PIT brackets, and threshold rationalisation; practitioners should track current legislative status as the framework was in active flux through 2024-2025.

What is the tax year and when are returns due?

The Nigerian tax year is the calendar year. Individual filers submit Personal Income Tax returns by 31 March of the following year via the State Internal Revenue Service of their state of residence (or FCT-IRS for FCT residents) [SC1]. Most salaried filers participate in PAYE (Pay-As-You-Earn) through employer monthly remittance to the SIRS of the state where the employer is registered (the State Where Employer is Located rule under the Sixth Schedule PITA, modified by the Joint Tax Board's Domicile Rules); PAYE filers whose income is fully covered may not need to file separately but tax-residency-status changes can require separate filing. Self-employed and corporate filers make Provisional Tax instalment payments throughout the year — typically quarterly for self-employed and per CITA elections for companies. Companies file annual Companies Income Tax returns within 6 months of fiscal year-end (with 5-month bonus extension upon application). VAT returns filed monthly by the 21st of the following month. Capital Gains Tax returns filed annually with PIT returns or with CIT returns as applicable. WHT returns filed monthly by the 21st of the following month. Stamp Duty is generally collected at point of transaction. The TaxPro-Max electronic filing portal launched by FIRS in 2021 provides online return submission, payment, taxpayer-account view, and audit-correspondence functionality. Many SIRS operate parallel state-level e-filing platforms (LIRS-Self-Service for Lagos, KADIRS portal for Kaduna). The post-2023 Tinubu administration reform packages (Tax Administration Bill, Tax Bill, Joint Revenue Board Bill, Nigeria Revenue Service Bill) propose harmonised quarterly filing and unified electronic-platform standards under the proposed Nigeria Revenue Service.

Who is a Nigerian tax resident?

Under Section 2 of the Personal Income Tax Act (PITA, Cap P8 LFN 2004 as amended), an individual is Nigerian tax resident if they (i) are domiciled in Nigeria and have a place of residence in Nigeria; (ii) are present in Nigeria for an aggregate of 183 days or more in any 12-month period; OR (iii) are a Nigerian government employee posted abroad [SC2]. The Sixth Schedule of PITA further determines the Relevant Tax Authority (RTA) for state-PIT-collection purposes — the state where the individual maintains their domicile-of-residence is the RTA, with detailed tie-breaker rules where multiple states have plausible claims (place of usual residence; place of principal employment; place of registered family residence). Nigerian residents are taxable in the state where they are deemed resident for the year — the Relevant Tax Authority (state IRS) collects PIT, not FIRS. Treaty residency tie-breakers under Nigeria's bilateral DTC network apply for dual-residency. Non-residents are taxable on Nigerian-source income only at flat or schedular rates: 10 percent WHT on dividends, 10 percent on interest, 10 percent on royalties, 10 percent on rents — with treaty rates applying downward for treaty-eligible recipients. Departure from Nigeria does not trigger comprehensive exit-tax framework comparable to OECD peers; specific anti-avoidance provisions catch certain pre-emigration restructurings under the General Anti-Avoidance Rule (GAAR) progressively introduced through the Finance Act series. The post-2023 reform packages contemplate clarification of residency rules and codification of digital-presence concepts. Diaspora Nigerians (substantial population in UK, US, Canada) face year-of-departure tax-residency-status issues frequently; SIRS-by-state interpretive variation creates compliance complexity for cross-state Nigerian residents.

What are the personal income tax rates?

Nigerian Personal Income Tax operates on a graduated bracket structure under the Sixth Schedule of PITA. Rates: 7 percent on first NGN 300,000; 11 percent on next NGN 300,000; 15 percent on next NGN 500,000; 19 percent on next NGN 500,000; 21 percent on next NGN 1,600,000; 24 percent above NGN 3,200,000 [SC3]. Consolidated Relief Allowance (CRA) of NGN 200,000 + 20 percent of gross income reduces taxable income before bracket-rate application — an important structural feature reducing effective rates materially; minimum tax floor of 1 percent of gross income applies under the Finance Act 2020 amendments. Pension contributions to RSAs (Retirement Savings Accounts) at 8 percent employee + 10 percent employer (under Pension Reform Act 2014) are deductible. National Housing Fund contributions at 2.5 percent of basic salary are deductible. NHIS (National Health Insurance Scheme) contributions are deductible. Specific deductions include life insurance premiums (limited to 5 percent of gross income), and qualifying gratuity received on retirement is exempt under specific conditions. Capital gains tax under Capital Gains Tax Act applies at 10 percent on chargeable gains; the post-2023 Finance Act expanded the CGT base to include digital assets (cryptocurrency disposals) at 10 percent. Specific CGT exemptions include: gains on government securities, gains on shares in Nigerian companies (subject to recent reform), gains on principal residence under specified conditions, and certain rollover-relief categories. The 2024 reform packages propose substantial restructuring including unified PIT brackets and threshold rationalisation under the Nigeria Tax Bill — practitioners should track legislative status as enactment timing evolves. Withholding regime applies on rents, dividends, royalties, professional services with offset against final liability.

How does Nigeria's corporate tax work?

The Nigerian Companies Income Tax Act (CITA) operates a graduated rate structure based on company size, introduced under the Finance Act 2019 (a major SME-relief reform). Standard rate is 30 percent for large companies (annual turnover above NGN 100 million); reduced rate of 20 percent for medium-sized companies (annual turnover NGN 25 million - 100 million); and 0 percent for small companies (annual turnover under NGN 25 million) [SC2]. The 2.5 percent Tertiary Education Tax (TET, raised from 2 percent under Finance Act 2021) applies on top of CIT for in-scope corporations and is calculated on the assessable profit base. The 0.25 percent Police Trust Fund Levy applies on net profit. The Nigeria Information Technology Development Agency (NITDA) Levy at 1 percent of net profit applies to specified IT, financial-institution, and large-corporate categories. Petroleum Profits Tax under the Petroleum Industry Act 2021 applies progressive rates 30-85 percent on hydrocarbon production, with the post-2021 framework introducing the Hydrocarbon Tax (HT) and Companies Income Tax overlay structure replacing the legacy PPT framework for new licences. Specific incentive regimes include Pioneer Status (3-year initial + 2-year extension tax holiday for qualifying activities under the Industrial Development (Income Tax Relief) Act, with periodic Pioneer Industries List updates), Export Expansion Grant, Free Zone (substantially reduced rates within designated FZs including the Lagos Free Zone, Kano Free Trade Zone, and Calabar Free Zone), Rural Investment Allowance, and post-2023 tax-reform-package incentive harmonisation under the proposed Nigeria Tax Bill. Nigeria has signalled intent to implement Pillar Two GloBE rules but specific legislative text not yet enacted as of mid-2026 [SC4]; the Finance Act 2023 introduced an effective minimum-tax framework that approaches Pillar Two principles for in-scope multinational groups. Withholding tax rates: 10 percent on dividends, interest, royalties (treaty rates apply downward); 5 percent on directors' fees; 5 percent on construction; 10 percent on professional/consultancy services. Tax loss carryforward is permanent (no expiry) under CITA; carryback unavailable.

What about VAT?

Value-Added Tax (VAT) was raised from 5 percent to 7.5 percent on 1 February 2020 under the Finance Act 2019 [SC2]. The standard rate is 7.5 percent — among the lowest standard VAT rates globally and a continuing point of fiscal-debate in Nigeria as the country seeks to expand non-oil revenue. The zero rate applies to exports and to a narrow set of specified categories. The exempt category covers most basic foodstuffs (locally manufactured, including agricultural produce, meat, fish, dairy), pharmaceuticals (specified categories), medical services (covering hospital services and qualifying healthcare), educational services (covering recognised educational institutions), residential rent, plays and performances conducted by educational institutions, and a small set of social-policy supplies. The mandatory VAT registration threshold is NGN 25 million of annual turnover (post-2023 Finance Act); voluntary registration is available below. Cross-border digital services to Nigerian consumers by non-resident vendors are subject to VAT under the post-2020 Significant Economic Presence (SEP) framework introduced by the Finance Act 2020 and elaborated by FIRS Information Circulars 2021/006 and 2022/001 — non-resident e-services suppliers must register and remit VAT on Nigerian-customer B2C supplies. Nigeria operates parallel state-level Consumption Tax in Lagos and a small number of other states (Lagos State Hotel Occupancy and Restaurant Consumption Tax at 5 percent, Edo State Consumption Tax) — the federal-state coordination has been the subject of ongoing constitutional challenge through 2024-25; the post-2023 reform packages contemplate harmonisation under proposed unified-VAT framework but the constitutional question of state-VAT-collection authority remains contested. The Tinubu administration's 2024-2025 reform packages contemplated raising VAT to 10 percent and beyond progressively; the legislative timing remains in flux. E-invoicing has not yet been mandated nationally though FIRS has piloted programs.

How are cryptoassets taxed?

The Nigerian framework for cryptocurrency taxation is in a transitional phase. The Securities and Exchange Commission (SEC) issued Rules on Issuance, Offering and Custody of Digital Assets in May 2022 establishing the regulatory framework for crypto-asset service providers. The Central Bank of Nigeria (CBN) historically restricted Naira-denominated banking access for crypto exchanges (CBN Circular of 5 February 2021 instructed banks to identify and close accounts of cryptocurrency-related entities); the CBN reversed this restriction in December 2023 reopening regulated banking access to crypto operators (CBN Circular of 22 December 2023 lifting the 2021 restriction subject to AML/CFT compliance). Nigeria has been one of the largest peer-to-peer crypto markets globally per Chainalysis adoption rankings. Tax-side: the post-2023 Finance Act introduced a 10 percent Capital Gains Tax on disposals of digital assets including cryptocurrency [SC4]. Mining rewards are taxable as ordinary income at fair market value on receipt under existing PIT or CIT frameworks. Receipt of crypto as employment compensation is taxable under standard PIT framework with PAYE remittance obligation on the Naira-equivalent value at receipt. Crypto-to-crypto exchanges are taxable disposal events. Foreign-cryptocurrency-exchange income earned by Nigerian-resident individuals is in scope of worldwide-income taxation under PITA's domicile-and-residence framework. The 2024 reform packages contemplate further codification of the digital-asset tax framework, with proposed expansion of FIRS's authority to require reporting from licensed crypto-asset service providers and aligning Nigerian framework with international Crypto-Asset Reporting Framework standards (Nigeria has signed but not yet implemented the OECD CARF). NFTs and stablecoins fall within the digital-asset definition for CGT purposes but face fact-specific characterisation challenges. The SEC-licensed Digital Asset Exchange framework rolled out in 2024-2025 with the first licences granted is progressively shaping the Nigerian crypto market.

What is the treaty network and what are the audit triggers?

Nigeria maintains a network of approximately 14 comprehensive Double Taxation Conventions in force — among the smallest treaty networks for a major-economy peer [SC4]. The treaty network covers UK, Canada, France, Belgium, Netherlands, Pakistan, Romania, Philippines, China, South Africa, Czech Republic, Slovakia, Singapore, and Spain. Most Nigerian treaties follow the UN Model with Nigeria-specific reservations on source-taxation rights, particularly preserving source-state taxation rights on technical services. Nigeria signed the OECD Multilateral Instrument and ratified it; the MLI's modifications, including the Principal Purpose Test under Article 7 MLI, apply to many of Nigeria's covered DTCs for periods from 2024 onward. Foreign tax-credit relief is generally claimed under Section 38 of CITA (for companies) or under PITA's analogous provisions (for individuals). Nigeria has acceded to the OECD Inclusive Framework on BEPS and is implementing the BEPS minimum standards; the Country-by-Country Reporting (CbCR) Regulations apply for fiscal years from 2018 onwards under the FIRS-issued Income Tax (Country-by-Country Reporting) Regulations 2018. Nigeria's 2024 tax-reform packages contemplate substantial expansion of the treaty negotiation programme, particularly with major trading partners (US, India, Germany, Japan) where no treaty currently exists. Audit triggers include: disproportionate VAT credit claims relative to declared output; transfer-pricing non-compliance under the Income Tax (Transfer Pricing) Regulations 2018 (TPD/CbCR documentation thresholds aligned with OECD principles); GAAR application targeting arrangements whose principal purpose is tax avoidance; SEP-rule non-compliance by non-resident digital-services suppliers; CITA Section 13 and PITA Section 19 anti-avoidance provisions targeting specific common avoidance patterns; non-compliance with Nigerian-content and local-content rules in oil-and-gas operations; unexplained bank-balance growth flagged via expanding CRS exchanges (Nigeria became a CRS adopter under the Multilateral Competent Authority Agreement effective from 2020 onward, with first exchanges processing 2019 calendar-year data in 2020); and the tax-clearance certificate (TCC) discontinuity where SIRS or FIRS records show inconsistent compliance history. Standard statute of limitations is 6 years from end of the tax year; extended where fraud or non-filing is established.

What are the common penalties and pitfalls for foreigners?

The Nigerian penalty framework under PITA Sections 71-104 and CITA Sections 81-104 imposes administrative-fine sanctions for late filings (NGN 25,000 first month + NGN 5,000 per subsequent month for individuals; NGN 50,000 first month + NGN 25,000 per subsequent month for companies), failure to file (penalty surcharge plus default-interest), incorrect declarations (10 percent surcharge on under-reported tax for ordinary cases; 100 percent additional penalty for fraudulent under-reporting), and failure to maintain records (NGN 10,000 to NGN 25,000 administrative fine plus assessment-by-FIRS-estimate exposure) [SC5]. Default interest accrues at the prevailing CBN MPR (Monetary Policy Rate) plus prescribed margin on unpaid tax. Tax-evasion criminal exposure under PITA Sections 99-104 and CITA Sections 99-104 carries fines and imprisonment up to 5 years for grossly-significant evasion, with FIRS Special Investigations Department (SID) handling criminal-prosecution-grade cases. Common foreign-national pitfalls: (1) the federal-state PIT collection split is frequently misunderstood by overseas employers — PIT is collected by the state IRS, not FIRS, and the State Where Employer is Located rule under the Sixth Schedule PITA can route PIT remittance to a state different from the employee's residence-state, requiring careful payroll administration; (2) the 10 percent WHT on dividends, interest, royalties, and professional services to non-residents is widely overlooked by foreign service providers and Nigerian payers — the withholding obligation rests with the Nigerian payer and is offset against eventual income-tax liability of the recipient (with refund availability if WHT exceeds liability), but treaty-rate reductions require beneficial-ownership documentation and tax-residency certificate filed before payment; (3) the Significant Economic Presence (SEP) framework for non-resident digital-services suppliers under Finance Act 2020 and FIRS Information Circulars 2021/006 and 2022/001 has been progressively enforced — many overseas SaaS, streaming, and e-commerce operators have failed to register, with resulting joint-and-several VAT and CIT exposure; (4) the post-2023 Finance Act 10 percent CGT on digital-asset disposals applies to cryptocurrency disposals by Nigerian residents on foreign exchanges, often overlooked because the foreign-exchange counterparty does not withhold or report; (5) the Tinubu administration reform packages in legislative flux through 2024-2025 create uncertainty about which version of PIT brackets, CIT rates, and VAT rates will apply for any given fiscal year — practitioners should track Finance Act-by-Finance Act changes and the proposed Tax Bill enactment status; (6) Tertiary Education Tax at 2.5 percent (raised from 2 percent under Finance Act 2021) is on top of CIT and is frequently miscomputed in the assessable-profit base derivation; (7) Pillar Two GloBE rules contemplated for Nigerian implementation are not yet enacted as of mid-2026 but in-scope MNE groups should prepare for compliance overhead; (8) the Joint Tax Board Domicile Rules for state-PIT-allocation create cross-state complexity for senior employees moving between Lagos and Abuja or other major centres; (9) the Federal-state Consumption Tax constitutional challenge means Lagos State Hotel Occupancy and Restaurant Consumption Tax at 5 percent and Edo State Consumption Tax may apply on top of federal VAT in those states for hospitality and food-service businesses; and (10) Pioneer Status incentive applications and Free Zone status are subject to ongoing review under the post-2023 incentive-rationalisation programme, with previously-granted status potentially subject to renegotiation under the proposed Nigeria Tax Bill.