Tax in Nigeria

Nigeria rewrote its tax framework with the four 2025 Tax Reform Acts (the Nigeria Tax Act, Tax Administration Act, Revenue Service Act, and Joint Revenue Board Act), effective 1 January 2026: the Nigeria Revenue Service (NRS) replaces FIRS as the central collection authority, personal income tax moves to new 0-25% bands with the first NGN 800,000 of annual income exempt and a 20% rent relief (capped at NGN 500,000), while VAT remains 7.5%. References to FIRS and the PITA schedule below describe the framework as it operated through 2025.

Who is the tax authority?

The Federal Inland Revenue Service (FIRS), headquartered in Abuja and reachable at firs.gov.ng, is Nigeria's principal federal tax body. FIRS sits under the Federal Ministry of Finance and was established by the FIRS Establishment Act 2007.

FIRS administers Companies Income Tax, Petroleum Profits Tax, VAT, Stamp Duties, and the Tertiary Education Tax. For personal income tax, however, the primary collectors are the 36 State Inland Revenue Services (SIRS) plus the FCT-IRS — each operating independently within their state. The Joint Tax Board (JTB) coordinates federal-state policy alignment across all 37 revenue authorities.

Disputes go first to the Tax Appeal Tribunal (TAT), then to the Federal High Court, the Court of Appeal, and finally the Supreme Court. Licensed practitioners are regulated by ICAN (Institute of Chartered Accountants of Nigeria), ANAN (Association of National Accountants of Nigeria), and CITN (Chartered Institute of Taxation of Nigeria).

What is the tax year and when are returns due?

Nigeria operates a calendar tax year (1 January to 31 December). PAYE employers remit monthly by the 10th of the following month. Annual individual returns are due 31 March via the state IRS of residence.

Who counts as 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 any one of three tests is met:

• Domiciled in Nigeria with a place of residence there
• Physically present in Nigeria for 183 days or more in any 12-month period
• A Nigerian government employee posted abroad

Residents pay tax on worldwide income. Non-residents are taxable on Nigerian-source income only, generally via flat withholding rates. The Sixth Schedule of PITA determines which state IRS acts as the Relevant Tax Authority when multiple states have a plausible claim on the individual.

What are the personal income tax rates?

Nigerian Personal Income Tax uses a seven-bracket graduated structure under the Sixth Schedule of PITA. The consolidated relief allowance (CRA)—the higher of NGN 200,000 or 1% of gross income, plus an additional 20% of gross income—reduces the taxable base before these rates apply.

Withholding Tax (WHT) applies at 5–10% on various payment types. The rates below show the most common categories.

WHT credits are offset against the recipient's final income-tax or CIT liability, with refund available where WHT exceeds the liability.

How does corporate tax work?

Nigeria's Companies Income Tax Act (CITA) applies a three-tier graduated structure based on annual turnover. The Finance Act 2019 introduced the SME-relief tiers.

Pioneer Status under the Industrial Development (Income Tax Relief) Act grants a 3-year initial plus 2-year extension tax holiday for qualifying activities on the Pioneer Industries List. Free-zone companies operating within designated FZs (Lagos Free Zone, Kano Free Trade Zone, Calabar Free Zone) enjoy substantially reduced rates. Tax losses carry forward permanently under CITA; carryback is not available.

Petroleum Profits Tax

Upstream petroleum operations fall under a distinct fiscal regime — entirely separate from CITA. Under the Petroleum Industry Act 2021 (which replaced the legacy PPT Act for new licences), upstream petroleum companies pay a combination of Hydrocarbon Tax and Companies Income Tax rather than a single PPT rate.

VAT and indirect taxes

Value-Added Tax (VAT) was raised from 5% to 7.5% on 1 February 2020 under Finance Act 2019. Nigeria's standard rate is among the lowest globally — a point of ongoing fiscal debate given the country's non-oil revenue targets.

Mandatory VAT registration applies once annual taxable turnover reaches NGN 25m. Voluntary registration is available below that threshold. Monthly VAT returns are due by the 21st of the following month via TaxPro-Max, FIRS's electronic filing portal.

Non-resident digital-services suppliers serving Nigerian consumers must register under the Significant Economic Presence (SEP) framework, introduced by Finance Act 2020 and clarified by FIRS Information Circulars 2021/006 and 2022/001. The constitutional status of state-level Consumption Taxes (Lagos State Hotel Occupancy and Restaurant Consumption Tax at 5%, Edo State) alongside federal VAT remains contested through ongoing court proceedings.

Capital Gains Tax

Capital Gains Tax (CGT) under the Capital Gains Tax Act (Cap C1 LFN 2004 as amended) applies at a flat rate on chargeable gains.

The Finance Act series expanded the CGT base to include digital-asset disposals — a reform that took effect under post-2023 Finance Act amendments. Crypto-to-crypto exchanges are treated as taxable disposal events. Specific rollover-relief and exemption categories apply where qualifying conditions are met.

What is the treaty network?

Nigeria maintains approximately 15 comprehensive Double Taxation Conventions in force — a relatively small network for Africa's largest economy. There is no treaty with the United States. Most Nigerian treaties follow the UN Model, with Nigeria reserving source-state taxation rights on technical services.

Nigeria acceded to the OECD Inclusive Framework on BEPS and implemented Country-by-Country Reporting from 2018. Transfer Pricing Regulations 2018 are OECD-aligned. Foreign Tax Credit relief is claimed under Section 38 CITA for companies or the analogous PITA provision for individuals.

Currency framework

The Nigerian Naira (NGN) is the functional currency for all tax calculations and return filings. Nigeria moved to a unified free-float exchange rate in June 2023 under the NAFEX reform implemented by the Tinubu administration.

Foreign-currency-denominated income earned by Nigerian residents is converted to Naira at the CBN rate on the date of receipt. WHT on cross-border payments is calculated on the Naira equivalent at the payment date. The Naira's volatility makes FX-rate documentation a recurring audit issue for multinationals.

Where does Nigeria sit in the Sub-Saharan Africa cohort?

Nigeria anchors the West African full-income-tax cohort as Africa's largest economy (GDP approximately USD 480 billion). The Sub-Saharan Africa cluster spans five distinct tax archetypes:

Nigeria is a member of ECOWAS, the African Continental Free Trade Area (AfCFTA), and the Commonwealth. It is Africa's largest economy by GDP and the most populous nation on the continent. The FIRS 2024–2027 Strategic Plan targets a meaningful increase in Nigeria's tax-to-GDP ratio, currently among the lowest for a major emerging market.

Common pitfalls

Six recurring compliance traps catch individuals, businesses, and foreign operators in Nigeria:

When should you talk to a Nigerian tax professional?

Some situations are straightforward enough to handle via TaxPro-Max and standard PAYE. Others require specialist input.

Scenarios that typically require a qualified Nigerian practitioner:

• Cross-state employment or relocation raising Sixth Schedule Domicile Rule questions
• Establishing a Nigerian company and determining which CIT tier applies
• Transfer pricing documentation under the FIRS Transfer Pricing Regulations 2018
• Upstream petroleum operations subject to the PIA 2021 regime
• SEP registration obligations for non-resident digital-services suppliers
• CGT on real property, shares, or cryptocurrency disposals
• FIRS or SIRS audit correspondence or Tax Appeal Tribunal proceedings
• Pioneer Status applications or Free Zone eligibility assessments

You can find vetted Nigeria practitioners through the directory below.

This page presents general reference information. It is not personal guidance for your specific situation. Tax rules change; successive Finance Acts have amended key rates and thresholds annually since 2019. Always check current figures on the FIRS website (firs.gov.ng) or with a ICAN/ANAN/CITN-credentialled Nigerian practitioner before filing.