A new tax conversation is underway in homes, WhatsApp groups, and Twitter threads across Nigeria, particularly among remote workers, freelancers, creators, and individuals earning money from clients or platforms abroad.
Why? Because Nigeria’s new tax reforms, effective 1 January 2026, change how foreign and remote income is treated, and for many Nigerians earning in USD, GBP, EUR, or other currencies, this actually matters.
In this article, I’ll break down what the new rules say, what counts as taxable income, how tax residency is determined, and what you can (and should) do to stay compliant without sounding boring (I know, I know, tax can be boring).
Nigeria has rewritten key parts of its tax laws through the Nigeria Tax Act and related fiscal reforms. One major shift is clarity around worldwide income for tax residents, which means if you live in Nigeria long enough, your foreign income can be taxable here too. However, the government has also made some crucial clarifications that should put many minds at ease:
The major takeaway is that tax applies, but not to every situation, and you won’t be taxed just for sending love or support home.
Also read: How to manage freelance income and taxes in South Africa
Under the reforms, someone is typically a tax resident if they spend at least 183 days in Nigeria in a 12-month period, or have strong economic and family ties to the country.
If you meet the resident criteria, Nigeria may tax your worldwide income, meaning income earned abroad could be taxable here.
If you live and work outside Nigeria and don’t meet the 183-day presence test, your foreign income usually isn’t taxable in Nigeria.
That’s important for diaspora Nigerians who are sending money home or earning abroad without being resident in the country.
Under the new framework, income earned from work done outside Nigeria, even for a foreign company, can be taxable if you’re a Nigerian tax resident.
That includes:
Importantly, gifts or genuine remittances, like money a relative sends for support, are not considered taxable income.
Also read: Tax basics every digital nomad needs to know about earning abroad
This is a key practical point.
If a local company hires you, they usually deduct tax at source (PAYE). But with a foreign company, they typically don’t, so that means you have to self-declare your income.
The Committee on Fiscal Policy and Tax Reforms has made it clear: if you earn from overseas and don’t tell the tax authorities, they can track those inflows (via banks or international data sharing) and treat them as undeclared taxable income, which can attract penalties, interest, and back taxes.
The responsibility to report and pay tax if you’re a resident is yours.
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Here are the applicable tax rates by annual income level:
If you are taxable in Nigeria, there are a few practical steps to follow:
A. Get a Tax Identification Number (TIN)
Most people get this when they open a bank account or register with a tax portal.
B. Register with the state tax authority
If you’re self-employed or a freelancer, you’ll file returns yourself.
C. File returns annually
Declare your worldwide income in naira. Digital platforms, such as TaxProMax are designed to make this process easier.
D. Keep records
Documents such as invoices, client contracts, bank receipts, and proof of foreign withholding tax are all crucial.
If you fail to register with Nigeria’s tax authority, you’ll incur a fine of ₦50,000 in the first month, followed by ₦25,000 for every subsequent month. Failing to file returns will incur a fine of ₦100,000 ($67.19) in the first month, followed by ₦50,000 for every subsequent month.
Tax authorities will investigate the information provided, and false declarations can result in fines of up to ₦1 million or a prison term of up to three years, or both.
Also read: How to declare taxes as a Brazilian freelancer earning from abroad
Here are a few real-world questions you may be thinking about:
Q: I earn abroad but live outside Nigeria, do I pay tax here?
Generally, no, as long as you’re a non-resident and your income isn’t Nigerian-sourced.
Q: I’m back in Nigeria for part of the year. Do I need to pay tax on my overseas income here?
It depends on whether you pass the 183-day test and become a tax resident.
Q: What if I never report my foreign income?
The government is establishing data-sharing arrangements with over 100 countries to monitor these flows and enforce compliance.
Nigeria’s 2026 tax reforms are a big deal, especially if you’re part of the growing global workforce. But they’re also clearer than many expected. Earnings from abroad can be taxable, but there are reliefs; they’re not applied to gifts or personal remittances, and your tax residency and situation matter a lot.
The most important thing you can do is stay informed, keep records, and report what you earn if you fall into the taxable category. By understanding the rules ahead of time, you’ll be prepared for 2026 and beyond.
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