Nigeria’s new tax laws have arrived with clear answers to one of the most confusing questions for globally mobile Nigerians: “Do I still owe tax back home if I earn money abroad?”
Whether you’re a doctor in the UK, a software engineer in Canada, a student working part-time in Germany, or a digital nomad serving clients in Dubai, this affects you directly. The answer, however, isn’t simply yes or no, it depends on where you truly “belong” according to the law.
It’s About Where You Live, Not Where You Work
Nigeria taxes you based on residency, not citizenship. If you’re considered a tax resident of Nigeria, you owe tax on all your income worldwide, whether you earn it in Lagos, London, or Los Angeles. But if you’re no longer a Nigerian tax resident, you only pay tax on income that comes from Nigeria itself. According to the new Tax Act, 2025, you’re considered a Nigerian tax resident if any of these apply:
The 183-Day Rule: You spend 183 days or more in Nigeria during any tax year (roughly 6 months)
The Permanent Home Test: You maintain a permanent home in Nigeria and intend to return, even if you’re temporarily abroad.
Take for example, Kemi, the UK doctor, who moved to London in 2020 for her medical residency. She visits Nigeria twice a year for 2 weeks each time (28 days total). She sold her Lagos apartment and has no permanent home in Nigeria. According to these definitions, she is not a Nigerian tax resident. She only pays Nigerian tax on any Nigerian income (like dividends from Nigerian investments).
Take again, Adaora, the graduate student, who is studying in Germany and works part-time at a local restaurant. She keeps her Lagos apartment and comes home every December for 3 weeks. She’s been in Germany for 8 months this year. Unlike Kemi, Adaora is likely still a Nigerian tax resident as she maintains a permanent home and intends to return. Therefore, her German earnings are taxable in Nigeria.
How Much Tax Will You Pay if You’re Still a Nigerian Tax Resident?
If, after applying the residency tests, you find that you still count as a Nigerian tax resident, then your global income, that is, your salary, freelance earnings, dividends, rent and even digital income, are taxable in Nigeria. The good news is that the system remains progressive, not punitive. The government doesn’t tax every naira at the same rate; instead, it uses income bands so that higher earners pay proportionately more while those at the bottom pay little or nothing.
Under the Nigeria Tax Act, 2025, the current tax bands are as follows:
| Taxable Annual Income (₦) | Tax Rate |
|---|---|
| First ₦300,000 | 7% |
| Next ₦300,000 | 11% |
| Next ₦500,000 | 15% |
| Next ₦500,000 | 19% |
| Next ₦1,600,000 | 21% |
| Above ₦3,200,000 | 24% |
If you meet the residency test, the income tax specified above isn’t the only tax you may apply. As a Nigerian tax resident, you’re also subject to other standard obligations such as capital gains tax on disposals of assets and withholding tax on certain types of income like royalties or service fees. The key idea is that once you’re legally resident for tax purposes, Nigeria has the right to tax your worldwide income under all the regular categories that would apply to anyone earning within the country.
Reliefs That Reduce Your Tax
Every taxpayer also enjoys a set of reliefs that reduce the amount of income subject to tax. These include a basic relief allowance of ₦200,000 or 1% of your gross income (whichever is higher), plus 20% of your gross income as an additional deduction. Contributions to pension funds, the National Housing Fund, life assurance policies, and health insurance schemes are also deductible. When these reliefs are applied, most middle-income earners end up paying far less than the headline rates suggest. At the lower end, individuals earning under ₦300,000 a year (or roughly ₦25,000 a month) typically owe no tax at all once reliefs are applied.
For example, if you earn ₦10 million in a year from your job abroad but are still classed as a Nigerian tax resident, you first deduct your reliefs, that is, ₦200,000 plus 20% of that gross income, leaving roughly ₦7.8 million as chargeable income. That income is then taxed progressively across the bands above. Your total effective tax rate after deductions might come to around 17% or 18%. Someone earning ₦3 million annually would likely see an effective rate closer to 8–10%.
Not a Resident?
If you’re a non-resident, the principle is simpler: you’re taxed only on income that arises in Nigeria, such as rent from Nigerian property, local dividends, or business profits earned within the country. Your foreign salary or investment returns remain outside the Nigerian tax net.
Special Rules for Employment Income Abroad
If you work for a foreign employer while living abroad but are still a Nigerian tax resident, your salary is generally taxable in Nigeria. Your foreign employment income is exempt from Nigerian tax if ALL of these conditions are met:
- You spend at least 183 days working abroad
- Your employer is not a Nigerian company
- The income is paid abroad (not through a Nigerian entity)
This rule prevents double taxation for genuine expatriate employees while ensuring that Nigerians working abroad for Nigerian companies still contribute.
Don’t Worry, You’re Protected Against Double Taxation
One of the biggest fears for Nigerians earning abroad is being taxed twice on the same income. The good news is that Nigeria has protection against this. One is Double Taxation Agreements (DTAs). Nigeria has such tax treaties with several countries, including United Kingdom, France, South Africa, Canada, Belgium, Netherlands, and other Ecowas countries. These agreements typically mean that tax paid abroad can be credited against your Nigerian tax liability. It also means that you won’t pay more than the higher of the two tax rates and that some income types may only be taxed in one country
Even for countries without formal agreements, Nigeria’s law allows you to credit foreign taxes paid against your Nigerian tax bill. You just need proper documentation, including but not limited to your foreign tax certificates, payslips showing tax deductions, official statements from foreign tax authorities and bank statements showing tax payments
When You Might Still Owe Tax in Both Countries
Sometimes, despite all the reliefs and agreements, you might still owe some tax in both countries. This usually happens when one, the other country’s tax rate is higher than Nigeria’s. Two, different countries have different rules about what constitutes taxable income. And three, there are timing differences in when income is recognized.
In this situation, you should first, determine your residency status in both countries. Then, check if a Double Taxation Agreement applies and what it covers. Claim credit for foreign taxes paid using proper documentation. File your Nigerian tax return even if you think no additional tax is due. And as always, keep detailed records of all income and taxes paid abroad.
Common Questions and Answers
Q: I work abroad but send money to family in Nigeria. Does this create a tax obligation?
A: Sending money to Nigeria doesn’t create tax liability. What matters is where you earn the income and your residency status.
Q: I’m planning to move abroad permanently. How do I stop being a Nigerian tax resident?
A: You need to establish that you no longer spend 183+ days in Nigeria and don’t maintain a permanent home here with intention to return. Consider formally notifying the tax authorities of your change in residency.
Q: What if I earn income in multiple countries?
A: Each country’s income is evaluated separately. You may be able to claim foreign tax credits for each country’s taxes against your Nigerian liability.
Q: Do I need to file a Nigerian tax return if I don’t owe additional tax? A: Yes, if you’re a Nigerian tax resident, you must report your worldwide income even if foreign tax credits eliminate your Nigerian tax liability.
Real-Life Scenarios
Scenario 1: Emeka, the Investment Banker Emeka works for a UK bank in London. He’s there 250 days a year but keeps his Lagos apartment and visits family regularly. His UK salary is £80,000, and he pays £20,000 in UK tax.
Tax Result: He’s a Nigerian tax resident, but his UK employment income is exempt because he meets the 183-day foreign employment rule.
Scenario 2: Ngozi, the Freelance Designer Ngozi lives in Lagos but has clients in the US, UK, and Germany. She earns $50,000 annually from these clients.
Tax Result: All income is taxable in Nigeria because she performs the work from Nigeria. Any foreign taxes withheld can be credited against her Nigerian tax bill.
Scenario 3: Olumide, the Dual Life Olumide splits his time between Lagos and New York, spending 6 months in each location. He earns income in both countries.
Tax Result: He’s likely a tax resident in both countries and will need to navigate the US-Nigeria tax treaty to avoid double taxation.
How Taxpal Can Help with Your Global Income
Managing tax obligations across multiple countries can be complex. Taxpal provides specialized support for globally mobile Nigerians, including:
- Residency status assessment to determine your tax obligations
- Foreign tax credit calculations to avoid double taxation
- Documentation guidance for claiming foreign tax reliefs
- Multi-country tax planning to optimize your global tax position
- Filing support for Nigerian returns with foreign income
Visit their website to choose between consultations or portal access, and let them help you navigate your global tax obligations with confidence. Whether you’re working abroad or earning from multiple countries, Taxpal will ensure you’re compliant while minimizing your overall tax burden.
