Many Nigerians in the diaspora have raised certain questions regarding the new tax reform laws and the possible implications. This note provides answers to the frequently asked questions and clarifies issues of concern.
𝐐1: 𝐖𝐢𝐥𝐥 𝐭𝐡𝐞 𝐦𝐨𝐧𝐞𝐲 𝐈 𝐬𝐞𝐧𝐝 𝐭𝐨 𝐍𝐢𝐠𝐞𝐫𝐢𝐚 (𝐟𝐨𝐫 𝐟𝐚𝐦𝐢𝐥𝐲, 𝐮𝐩𝐤𝐞𝐞𝐩, 𝐠𝐢𝐟𝐭𝐬, 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬 𝐨𝐫 𝐨𝐭𝐡𝐞𝐫 𝐩𝐚𝐲𝐦𝐞𝐧𝐭𝐬) 𝐛𝐞 𝐭𝐚𝐱𝐞𝐝 𝐮𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐥𝐚𝐰𝐬?
A: No, genuine personal transfers such as family remittances, gifts, refunds (e.g., flight tickets), or community savings contributions are not treated as taxable income. Only income earned or deemed to be income (e.g., wages, business profits, investment returns) is subject to tax. Every individual is required to self-report their income and pay tax where applicable. Tax authorities are expected to issue guidelines on how to distinguish taxable from non-taxable inflows.
𝐐2: 𝐖𝐢𝐥𝐥 𝐈 𝐛𝐞 𝐭𝐚𝐱𝐞𝐝 𝐭𝐰𝐢𝐜𝐞, 𝐚𝐛𝐫𝐨𝐚𝐝 𝐚𝐧𝐝 𝐢𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚, 𝐨𝐧 𝐭𝐡𝐞 𝐬𝐚𝐦𝐞 𝐢𝐧𝐜𝐨𝐦𝐞?
A: No. Income earned abroad and brought into Nigeria by a non-resident individual is now specifically exempted from tax in Nigeria regardless of whether tax was paid abroad or not, for instance those who reside in countries with no personal income tax. In addition, Nigeria has Double Taxation Agreements (DTAs) with several countries, and the new tax laws provide for a unilateral relief where a DTA does not exist to ensure that the same income is not taxed twice.
𝐐3: 𝐇𝐨𝐰 𝐢𝐬 𝐭𝐚𝐱 𝐫𝐞𝐬𝐢𝐝𝐞𝐧𝐜𝐲 𝐝𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐞𝐝, 𝐚𝐧𝐝 𝐰𝐢𝐥𝐥 𝐧𝐨𝐧-𝐫𝐞𝐬𝐢𝐝𝐞𝐧𝐭𝐬 𝐰𝐢𝐭𝐡 𝐍𝐢𝐠𝐞𝐫𝐢𝐚𝐧 𝐚𝐬𝐬𝐞𝐭𝐬 𝐨𝐫 𝐚𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐛𝐞 𝐭𝐚𝐱𝐞𝐝? 𝐀𝐧𝐲 𝐢𝐦𝐩𝐚𝐜𝐭 𝐨𝐧 𝐝𝐮𝐚𝐥-𝐜𝐢𝐭𝐢𝐳𝐞𝐧𝐬𝐡𝐢𝐩?
A: Residency is based on the 183-day rule (cumulative days of physical presence in Nigeria within a 12-months period). Non-residents are taxed only on income derived from Nigeria (e.g., rental income, dividends, business profits). Diaspora Nigerians living abroad who are not tax resident in Nigeria are not taxed on their foreign employment or business income. Dual citizenship has no impact on the tax status of an individual whether resident or non-resident in Nigeria.
𝐐4: 𝐇𝐨𝐰 𝐝𝐨 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐥𝐚𝐰𝐬 𝐚𝐟𝐟𝐞𝐜𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬 (𝐬𝐭𝐨𝐜𝐤𝐬, 𝐫𝐞𝐚𝐥 𝐞𝐬𝐭𝐚𝐭𝐞, 𝐛𝐨𝐧𝐝𝐬, 𝐭𝐫𝐞𝐚𝐬𝐮𝐫𝐲 𝐛𝐢𝐥𝐥𝐬, 𝐒𝐮𝐤𝐮𝐤, 𝐞𝐭𝐜.)?
A: Generally, income from investments in Nigeria are either exempt, subject to capital gains tax (CGT) or withholding tax as a final tax. Government bonds including Sukuk are tax exempt. CGT applies to the sale of real estate other than sale of owner occupied buildings. Shares are exempt up to proceeds not exceeding N150 million and N10 million gains in a year. Dividends, non-government bond interest and rental income are subject to withholding tax at 10% as final tax which may be reduced to 7.5% for recipients in certain countries such as the UK, South Africa and China.
𝐐5: 𝐖𝐢𝐥𝐥 𝐢𝐧𝐜𝐨𝐦𝐞𝐬 𝐬𝐮𝐜𝐡 𝐚𝐬 𝐩𝐞𝐧𝐬𝐢𝐨𝐧𝐬, 𝐬𝐭𝐢𝐩𝐞𝐧𝐝𝐬, 𝐨𝐫 𝐫𝐞𝐦𝐨𝐭𝐞 𝐰𝐨𝐫𝐤 𝐞𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐨𝐟 𝐝𝐢𝐚𝐬𝐩𝐨𝐫𝐚𝐧𝐬 𝐛𝐞 𝐭𝐚𝐱𝐞𝐝 𝐢𝐟 𝐫𝐞𝐜𝐞𝐢𝐯𝐞𝐝 𝐢𝐧𝐭𝐨 𝐚 𝐛𝐚𝐧𝐤 𝐚𝐜𝐜𝐨𝐮𝐧𝐭 𝐢𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚 𝐨𝐫 𝐞𝐚𝐫𝐧𝐞𝐝 𝐰𝐡𝐢𝐥𝐞 𝐭𝐞𝐦𝐩𝐨𝐫𝐚𝐫𝐢𝐥𝐲 𝐩𝐫𝐞𝐬𝐞𝐧𝐭 𝐢𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚?
A: Only income that arises in Nigeria is taxable for non-residents. Pensions and stipends from abroad are not taxed in Nigeria unless received for work done in Nigeria. Remote workers are taxed based on the rules in the country where they are resident or earn such income, not merely where payment is made. For residents (see Q3), worldwide income applies, subject to reliefs, allowances, and exemptions e.g., low-income thresholds.
𝐐6: 𝐃𝐨 𝐍𝐢𝐠𝐞𝐫𝐢𝐚𝐧𝐬 𝐚𝐛𝐫𝐨𝐚𝐝 𝐧𝐞𝐞𝐝 𝐚 𝐓𝐚𝐱 𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐍𝐮𝐦𝐛𝐞𝐫 (𝐓𝐈𝐍) 𝐨𝐫 𝐭𝐨 𝐟𝐢𝐥𝐞 𝐚𝐧𝐧𝐮𝐚𝐥 𝐭𝐚𝐱 𝐫𝐞𝐭𝐮𝐫𝐧𝐬 𝐢𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚?
A: It depends. A TIN is not required and there is no requirement to file tax returns unless you earn employment or business income from Nigeria. Non-residents without Nigerian-source income are not obliged to file annual returns. Those with taxable employment or business income in Nigeria are required to file returns. Simplified channels (e.g., TaxProMax, online TIN applications) are available to ease compliance. The same rule applies to the opening and continued operation of a bank account in Nigeria, a TIN is not required unless such an account is for business purposes or receipt of income.
𝐐7: 𝐇𝐨𝐰 𝐜𝐚𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐃𝐢𝐚𝐬𝐩𝐨𝐫𝐚 𝐰𝐡𝐨 𝐫𝐞𝐪𝐮𝐢𝐫𝐞 𝐚 𝐓𝐈𝐍 𝐨𝐛𝐭𝐚𝐢𝐧 𝐨𝐧𝐞?
A: For individuals, a TIN can be obtained from the Joint Tax Board via https://tin.jtb.gov.ng. For companies, TIN is now automatically assigned at the point of registration with the Corporate Affairs Commission. Those with existing companies without a TIN can obtain one from the FIRS.
𝐐8: 𝐇𝐨𝐰 𝐚𝐫𝐞 𝐍𝐆𝐎𝐬 𝐚𝐧𝐝 𝐝𝐢𝐚𝐬𝐩𝐨𝐫𝐚-𝐨𝐰𝐧𝐞𝐝 𝐬𝐦𝐚𝐥𝐥 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬 𝐢𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚 𝐚𝐟𝐟𝐞𝐜𝐭𝐞𝐝?
A: NGOs are tax-exempt if they are registered and operate strictly for charitable purposes, and comply with reporting and filing requirements. Diaspora-owned SMEs in Nigeria are treated like local businesses, taxed on profits but eligible for incentives and reliefs available to small enterprises.
𝐐9: 𝐇𝐨𝐰 𝐰𝐢𝐥𝐥 𝐭𝐡𝐞 𝐠𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐞𝐧𝐬𝐮𝐫𝐞 𝐚𝐜𝐜𝐨𝐮𝐧𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐢𝐧 𝐭𝐡𝐞 𝐮𝐬𝐞 𝐨𝐟 𝐭𝐚𝐱𝐞𝐬 𝐜𝐨𝐥𝐥𝐞𝐜𝐭𝐞𝐝?
A: The reforms mandate transparency measures, including public reporting, governance structure and independent oversight for tax revenues. Other fiscal measures are being strengthened to link tax revenues to visible infrastructure and service delivery with safeguards against corruption and framework to prevent and punish misuse of taxpayer data.
𝐐10: 𝐀𝐫𝐞 𝐭𝐡𝐞𝐫𝐞 𝐢𝐧𝐜𝐞𝐧𝐭𝐢𝐯𝐞𝐬 𝐨𝐫 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐟𝐨𝐫 𝐝𝐢𝐚𝐬𝐩𝐨𝐫𝐚 𝐍𝐢𝐠𝐞𝐫𝐢𝐚𝐧𝐬 𝐮𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐫𝐞𝐟𝐨𝐫𝐦𝐬?
A: Incentives under the new laws apply generally to certain investments including diaspora-led investments in key sectors (e.g., priority sector incentives in agriculture, creative sector, manufacturing, etc), SME corporate tax exemption threshold, exemption of VAT on real estate, etc.