Tax In Nigeria

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in Nigeria is complying with the country’s tax system. As well as paying tax in Nigeria, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge. 

How do I calculate my taxable income: 

If you’re working in Nigeria under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Nigeria for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Nigeria, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Nigeria through PAYE is left with the prospect of doing everything themselves.

Do you know much about Nigerian Tax Law? Does Nigeria have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Nigeria can range from 7 to 24 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in Nigeria, we can supply it to you free of charge. 

Using an Umbrella Company for Income Tax : 

Contractors in Nigeria are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Nigerian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Nigerian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Nigerian tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in Nigeria, many of whom are experts in tax and immigration laws. If you have any questions about tax in Nigeria, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Nigerian work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Nigeria but without the overhead of directly dealing with the Nigerian tax authorities. Get in touch with us today for some reliable advice on tax in Nigeria!

 

When Do You Need to Lodge Your Tax Return?: 
The tax year is the calendar year. Tax returns may be lodged from 1 January.
Tax Filing Deadline : 
31 March
Can you file it online? : 
Yes, you can file online through the ITAS e-filing Portal.
Currency: 
Nigerian Naira (NGN)
Tax-free Threshold in: 
None
Grossed Income: 
First 300,000
Tax Rate: 
7%
Grossed Income: 
Next 300,000
Tax Rate: 
11%
Grossed Income: 
Next 500,000
Tax Rate: 
15%
Grossed Income: 
Next 500,000
Tax Rate: 
19%
Grossed Income: 
Next 1,600,000
Tax Rate: 
21%
Grossed Income: 
Above 3,200,000
Tax Rate: 
24%
How long does it take to set up: 
18 days
How much does it cost: 
21,500 + 5000 for every 1 million of share capital above NGN 1 million + 0.75% stamp duty on share capital
Is it easy? : 
Starting a Business Rank: 130 (Source: World Bank)
How to File Taxes in: 

Individuals with a taxable income of NGN 30,000 or less are not required to file a tax return. Employers are obliged to file annual returns in respect of an assessment year no later than 31 January of the following year. The process for individuals to file tax returns involves:

Step 1: Register for a Taxpayer Identification Number (TIN) at your nearest Federal Inland Revenue Service (FIRS) office. Bring any of the following documents:

  • International passport
  • National Identity Card
  • Utility bill
  • Also provide a phone number and email.

Step 2: Obtain an ‘e-filing Access Application Form’ from any FIRS Office or download from the FIRS website. Complete the form by nominating an Officer or Tax Agent that will represent the organisation you work for on tax matters. Indicate on the form the type of access that the nominee should have, either to declare (file returns), view only or both.

Step 3: Return the form to the FIRS tax office to obtain a username and password that gives you access to the e-filing site.

Step 4: Log into the e-filing Portal using your username and password.

Step 5: On the home page, click ‘view all tax declarations’ and then click the tax type, ‘personal income tax’ to file it.

Step 6: To fill out the amounts for the form lines relating to income, documents relating to the following should be collected:

  • Statements of income, bonuses and allowances
  • Gratuities and benefits
  • Pension Income
  • Rent
  • Commissions
  • Interest and dividends

Step 7: Fill out the form lines for any deductions (tax reliefs). Documents regarding the following will be relevant:

  • Contributions to pension
  • Contributions to health insurance
  • Contributions to life insurance.

Step 8: Submit the declaration. You will be led to the View Filed Declaration page which gives you a summary of your declaration. You will also see a document number displayed at the top right hand corner of the summary document.

Step 9: To pay your tax, the following methods may be used.

  • Pay online through any of these methods here.
  • Pay at a bank by providing the document number of your summary.

 

FIRS website: http://www.firs.gov.ng/Pages/Default.aspx

Nigerian Immigration Department: https://portal.immigration.gov.ng/pages/visaguidelines

Notes: 

Where a taxpayer has no taxable income because of personal reliefs and allowances, a minimum tax of 1% of gross income is due. 

Does the 183 day rule apply in: 

Yes

When do you become a tax resident in: 

Individuals are considered a resident if they fall into one of the following categories:

  • Nigerian individuals who reside in Nigeria.
  • Expatriate employees of a resident company who are present in Nigeria for employment purposes.
  • You are present in Nigeria for more than 183 days in a 12-month period.
  • Expatriate employees of a non-Nigerian company if their remuneration is recharged to a Nigerian company.
Am I taxed on my global income in: 

Yes, if you are a resident. However, foreign earnings of Nigerian residents are tax exempt if the earnings are repatriated into Nigeria in convertible currency through a domestic account with an approved Nigerian bank. Non-residents are only subject to tax on their Nigerian-source income. 

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