As clarifications on the new tax reform law continues, the Federal Government has restated that not all incomes earned abroad and brought into Nigeria by nonresident individuals will be taxed, regardless of whether tax was paid abroad or not.
Chairman, Tax Reform Committee, Mr Taiwo Oyedele, made the clarification on his X handle at the weekend when noted the impact of the new law on Nigerians in the diasporaHe stated that, 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”.
He explained further that no genuine personal transfers such as family remittances, gifts, refunds (e.g., flight tickets), or community savings contributions would be treated as taxable income. He, however, said only incomes based on wages, business profits, investment returns would be 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,” he added. On how tax residency is determined, and if non-resident Nigerians’ assets or accounts will be taxed as well as impact on dual citizenship, he said:
Residency is based on the 183-day rule (cumulative of physical presence in Nigeria within “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”.
On how the new law, which will be operational from January 2026, will affect investment (stocks, bonds, real estate, treasury bills, Sukuk, etc), he added that income from investments in Nigeria was either exempt, subject to Capital Gains Tax (CGT) or Withholding Tax as a final tax. In addition, Oyedele reaffirmed that government bonds including Sukuk were 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”, he explained.
On whether incomes such as pension, stipends or remote work earnings of diasporans will be taxed if received into a bank account in Nigeria or earned while temporarily present in Nigeria, he said only income that arises from 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.”
