Personal Income Tax in Nigeria

Chargeable Income & Benefit in KInd

Personal Income tax in Nigeria was reviewed following the Tax Reform Act 2025. The Act provides that Tax shall be payable for each year of assessment on the aggregate amounts of the income of every taxable person for the year from a source inside or outside Nigeria.

Chargeable Income

interest
a. accrues in Nigeria where the liability to its payment falls upon a resident of Nigeria or Nigerian permanent establishment of a non-resident person regardless of where or in what form the interest is paid.

b. includes, penal interests and any payment similar to interest, income from any government or corporate securities, bonds or debentures, premiums or prizes attaching to such securities, bonds or debentures, discounts, fees, premium, share of profit in non-interest finance arrangements, finance cost element in a finance lease, or foreign exchange differences arising in relation to securities, any payment in relation to derivatives used in hedging securities, or any other payment of similar nature

c. in respect of debts, includes return on discounted papers, income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits or foreign exchange differences arising in relation to a debt, and
d. in respect of regulated securities lending transactions, includes compensating payments received by a borrower from its approved agent or a lender, provided that the underlying transaction giving rise to the compensating payment is a receipt of interest by a lender on the collateral it received from its approved agent or a borrower;

Dividend
a. a company that is not in the process of being wound up or liquidated, profits, in any form, shared or distributed to the shareholders, including an amount equal to the nominal value of bonus shares, debentures or securities awarded to the company’s shareholders

b. a company that is being wound up or liquidated, any distribution, whether in money or money’s worth, earned before or during the winding up or liquidation, and

c. regulated securities lending transaction, compensating payments received by a lender from its approved agent or borrower;

Royalty: includes payments of any kind received or receivable, paid or payable as a consideration for the use of, or the right to use or exploit any property;

Money instruments: means instruments traded in money markets including government securities, treasury Acts, treasury or savings certificates, debenture certificates, commercial papers, certificates of deposits, call money, commercial Acts, treasury bonds and any other money instrument; and

The transfer of securities or shares: under a regulated securities lending transaction shall not amount to a disposal, provided that such securities or shares are transferred from a lender and subsequently returned by the borrower to the lender

Read more: full income chargeable explained

Benefit in Kind

Section 14 of the Act lists out expenses regarded as benefit to the employee. Where any expense is incurred by an employer in the provision of benefits or perquisite (e.g. motor vehicles, furniture & fittings etc.), other than the provision of living accommodation, the following provisions shall apply;

a. An employee is deemed to have earned an annual benefit of amounts equal to 5% of any amount expended by an employer in acquiring an asset in the event that any asset belonging to the employer is used wholly or partly. However, where such amount cannot be so ascertained, 5% of the market value of the asset at the time of the acquisition would be applied, as determined by the relevant tax authority;

b.  where the employer pays any amounts for rent or hire in respect of any such asset, it is deemed that the employee had earned annual benefit of the annual amount of the rent or hire cost payable by the employer on such asset; and

c.  in any other case, the employee is deemed to have earned annual benefits equal to the annual amounts expended by the employer in respect to the benefit.

In respect of subsection 1a, the amount of benefit shall be reduced by any expense made by the employee.

The following expenses incurred by the employer for the benefit of the employee are not regarded as BIK
a. Meal vouchers for staff or the provision of meals in any canteen for the staff generally
b. the provision of work tools or work equipment, any overall, uniform or other protective clothing
c.  in relation to change in place of residence of the employee as a result of change of the employee’s employment or place of employment.

 In this section, a reference to any expenses incurred includes a reference to a proportion of such expense.

Anything provided for an employee, unless expressly referenced to something provided for the employee, shall be construed as including a reference to anything provided for the family, spouse, dependant, servant, or guest of that employee by the employer.

Where premises made available by an employer and the spouse or family of the employee;
a. does not pay no rent for the premises, or

b. pays rent which is less than the annual rental value of the premises, it shall be regarded as additional emoluments to the employee, equal to the annual rental value of the premises, subject to a maximum of 20% of annual gross income from the employment, excluding the rental value.

In this section, “annual value of the premises” refers to;
a. the annual rental value of the premises as determined for the purposes of local rates under that law;

b. in any other case, what the relevant tax authority determines as the annual rental value

Read more:

– Resident and non-resident individual
– The complete Personal Income Tax & computation guide
– The Nigeria Tax Reform Act 2025 – Top 18 Things to Know