This guide breaks down key considerations to help diaspora Nigerians comply with Nigerian tax laws while avoiding double taxation.
This article has been updated to reflect the provisions of the Nigeria Tax Act, 2025. The Act clarified and modernised tax rules but left the core principles of residency-based taxation largely intact.
1. Your Residency Status Still Determines Tax Liability
The most important concept remains unchanged: the new tax laws remain built around residency status. An individual is considered a tax resident if they spend at least 195 days in Nigeria within 12 months. Tax residents are subject to worldwide income taxation. Thus, the income they earn both within and outside Nigeria must be declared and taxed locally.
Conversely, non-residents, or those spending fewer than 195 days in Nigeria annually, are only taxed on income derived from Nigerian sources. Examples include rental income from their Nigerian properties or employment duties performed in Nigeria.
This remains the central rule: where you “live,” not just your citizenship, determines how much you owe.
2. The Employment Income that Apply for Non-Residents
Non-residents working in Nigeria may still face tax obligations unless specific exemptions apply under a Double Taxation Treaty (DTT). For instance, if a non-resident’s employment duties are performed in Nigeria, but:
- The employer is based outside Nigeria,
- Their remuneration is not paid through a Nigerian fixed base (e.g., a local office), and
- Their income is taxed in the employer’s country under a DTT,
then the individual may be exempt from Nigerian taxes. Nigeria has DTTs with several countries, including the UK, Canada, Netherlands, Belgium, South Africa, and most Ecowas countries, to prevent double taxation.
If you fall under these agreements, only one country will tax your income. You can then claim credit for taxes paid abroad when filing in Nigeria (if still resident).
For most Nigerians permanently employed abroad, your host country taxes your salary, and you owe nothing more to Nigeria unless you also qualify as Nigerian-resident.
3. Taxation of Business Profits and the SEP Rule
The Nigeria Tax Act, 2025 further entrenches the concept of Significant Economic Presence (SEP), a relatively new rule targeting digital and remote service providers earning from Nigerian customers.
If you run a business abroad that earns significant fees from Nigerian clients — for example, providing consultancy, technical, management, or professional services remotely — you may now have a taxable “presence” in Nigeria even without a physical office here.
The Ministry of Finance has yet to fully define the SEP thresholds and metrics, so diaspora businesses should monitor updates closely and seek professional advice if they earn substantial income from Nigeria while physically abroad.
4. Exemptions for Most Diaspora Nigerians
The vast majority of Nigerians abroad, especially those working full-time and paying taxes in their host countries, remain exempt from Nigerian taxes on their foreign-earned income, unless they qualify as Nigerian-resident.
Taxes apply primarily to:
- Nigerians who spend more than 195 days annually in Nigeria but also earn income abroad.
- Nigerians abroad who earn Nigerian-sourced income and don’t report it in their host country.
The 2025 Tax Act did not change the definition of tax residency or remove these exemptions.
5. The New Tax Act Do Not Alter the Core Principle
While the 2025 reforms introduced changes like streamlined filing, modernised digital services, and stronger enforcement, they left the core residency-based framework intact. For Nigerians living abroad who do not meet the residency criteria, foreign-earned income remains outside Nigeria’s tax net.
However, the new law does improve reporting systems and data sharing, that is geared at making it harder to hide Nigerian income or claim exemptions dishonestly.
The updated laws confirm what diaspora Nigerians have long known: tax in Nigeria is based on where you live and where you earn. While the government has strengthened its ability to enforce tax compliance, it has not imposed new obligations on Nigerians legitimately living and working abroad.
That said, Nigerian-sourced income such as rent, dividends, business profits, still attracts tax and must be reported properly.
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