Resident
An individual is regarded as Resident in Nigeria in an assessment year if he is domiciled in Nigeria, sojourns for a period or periods amounting to 183 days in Nigeria in a 12 month period or serves as a diplomat or diplomatic agent in Nigeria. In computing Personal Income Tax of an individual, the income profits or gains of a person who is a Resident of Nigeria are deemed to accrue in and are chargeable to Tax in Nigeria wherever they arise, whether they have been received or brought into Nigeria or not.
Resident Individual
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An employee’s income, profit or gain from an employment is regarded as derived from Nigeria where;
– the employee resides in Nigeria; or
– the performance of employment duties is partly or wholly carried out in Nigeria and
a. the remuneration is paid by, or on behalf of an employer who resides in Nigeria
b. a permanent establishment, fixed base in Nigeria or any other form of taxable presence of a non-resident employer bears the remuneration
c. the remuneration is not liable to tax in the employee’s country of tax residence.
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Notwithstanding the provisions as given in subsection 1b, a non-resident’s employment income shall not be taxed in Nigeria where;
a. The employer is a start-up, or is engaged in creative arts or technology-driven services and
b. the employment income is taxable in the country of tax residence of the employee.
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The remuneration of a Nigerian Government employee is derived from Nigeria in a situation where the remuneration of such employee is granted an exemption from tax under an agreement or diplomatic privilege while performing his duties in another country.
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The remuneration from an employment in Nigeria during any period of temporary absence or leave by an employee is derived from Nigeria, where his duties are wholly or mainly performed in Nigeria.
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An individual from an employment is chargeable to tax in Nigeria where;
a. the individual is performing a stand-by duty on-board a ship preparatory to his signing articles in Nigeria or is a seafarer serving under articles which he signed in Nigeria
b. The individual is a Nigerian and performs the duties of his employment in a foreign country, whereby that country exempts the remuneration from tax under a diplomatic arrangement or an agreement to which Nigeria is a party or
c. The individual is Nigerian and performs the duties of his employment in Nigeria for a foreign country international organization, and such remuneration is not subject to tax in any other country under an agreement or diplomatic arrangement to which Nigeria is a party.
Non-Resident Individual
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In accordance with the provisions of section 17 of this Act, Income, profits or gains of a non-resident person which accrues in, or is derived from Nigeria are chargeable to tax.
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Gains arising from disposal of chargeable assets by a non-resident person are taxable in Nigeria where;
a. Gains arise from a trade, profession, vocation or business carried on in Nigeria by the non-resident person
b. any asset located in Nigeria; or
c. any asset deemed to be located in Nigeria under this Act.
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Where a non-resident person derives profits from any profession, business, trade or vocation carried on in Nigeria, such profits are taxable given;
a. the individual has a significant economic presence or permanent establishment in Nigeria such that the profit is attributable to the significant economic presence or permanent establishment
b. a resident person or a permanent establishment of a non-resident person in Nigeria makes payment in respect of services furnished from outside of Nigeria to a resident of Nigeria or the Nigerian permanent establishment of a non-resident person;
i. where under a contract of employment, the payment is made to an employee of the person making the payment.
ii. the payment is made by a person for teaching in an educational institution or by an educational institution
iii. payment is made by a foreign permanent establishment of a Nigerian resident and the expense is likewise borne by that permanent establishment; or
c. a person resident in Nigeria makes payment is made to that person or to a Nigerian permanent establishment of a non-resident person, in respect of risks insured or insurance premiums from Nigerian territory.
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in accordance with section 51 of the 2025 NTA, all amounts deducted at source from payments made for any of the activities mentioned in subsection 3b and c, shall be the final tax on that payment unless a significant economic presence or permanent establishment is owned by such person to which the payment is attributable
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A non-resident person’s gains, profits or income which are attributable to its Nigerian permanent significant economic presence establishment, shall be ascertained in line with the provisions of the Act, subject to the following conditions;
a. the non-resident’s permanent establishment in Nigeria shall be deemed to have same credit rating as its non-resident company
b. in line with section 191 of the Act, the permanent establishment shall be deemed to have as much equity and loan capital as it could be expected to reasonably have
c. taxable profits which are to be attributed to the permanent establishment shall include;
i. income arising therefrom where the goods or merchandise sold are of same or similar kind as those sold through the permanent establishment, made directly to Nigeria by the non-resident person or its connected persons and
ii. income arising from rendering services or any other business activity carried on in Nigeria by the non-resident or its connected persons of same or similar kind as those performed through the permanent establishment
d. No deduction shall be made with regards to any cost except such cost was incurred with respect to the production of the taxable profits which are attributable to the permanent establishment, and
e. Where royalties, fees or similar payments are made by the permanent establishment to the non-resident person or any of its connected persons, in return for the use of patents or other rights, other than towards reimbursement of actual expenses, no deductions shall be allowed.
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In the event that the total profits attributable to a significant economic presence or permanent establishment in Nigeria cannot be ascertained in accordance with subsection 5, the profit margin to total income of the non-resident person generated in Nigeria shall be applied to determine the total profits.
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The profit margin of the non-resident person to his total income generated from Nigeria shall be applied to determine total profit in the event that the total profits with respect to the permanent establishment or significant economic presence of the non-resident person in Nigeria is lower than the amount resulting from applying the profit margin of the non-resident person to his total income generated from Nigeria.
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the tax to be paid under this section shall not be less than the tax withheld at source under the NTA 2025, notwithstanding the provisions of subsections 6 and 7, and where the income is not liable to a deduction of tax under the Act, 4% of the total income generated from Nigeria shall apply.
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In line with this section;
a. The following establishes a non-resident person as deemed to have a permanent establishment in Nigeria;
i. has a place in Nigeria, for the purposes of its business, through which its business is wholly or partly carried on or at its disposal
ii. a person in Nigeria is authorized to conduct a trade or business on its behalf, or on behalf of other persons which have a controlling interest in it or is controlled by it
iii. deliveries are made on its behalf from goods or merchandise which it maintains in Nigeria
iv. executes a project in Nigeria solely or together with any other person, or performs any supervisory activity in connection with the activities notwithstanding any split or number of entities engaged in any of the activities of the project and whether or not only part of the project was performed in or outside Nigeria. Examples of projects include construction, commissioning or decommissioning, surveys, deliveries, installation, building, assembly or designs
v. engages subcontractors, agents or employees in the performance of any service in Nigeria
b. subject to any regulations that may be issued by the Minister, a non-resident person shall maintain a significant economic presence in Nigeria from where such person either by himself or through other persons transmits, or sends messages, signals, images, sounds, or data of any kind by radio, cable, electromagnetic systems or other electronic or wireless apparatus to Nigeria with respect to any activity, including application store, electronic commerce, online teaching services, high frequency trading, online adverts, etc. and from which profit can be attributable to such activity.
c. Where a non-resident person employs persons resident in Nigeria whose duties of employment are not performed primarily for customers in Nigeria, such person shall not be deemed to have a permanent establishment or significant economic presence in Nigeria
d. “a place” refers to any location in Nigeria, which is available for the use of the person, irrespective of the length of time it is used, whether it is owned, leased or rented and shall include;
– an office, branch, factory, sales outlet, workshop or place of management
– a quarry, mine, gas, water, well for crude oil, bitumen or any other natural resource, or place of extraction or exploitation of natural resources or supervisory activity in connection to it
– facilities such as vessels, any structure or installation used in exploring natural resources, or any supervisory activity connected with such facilities
– a construction, building, installation site, assembly or any place for performing service or supervisory activity
e. a proportion of the earnings before interest and tax (EBIT) of a person to income or revenue in its published audited financial statement shall be deemed “profit margin”, and where there is no available published financial statements for the period or such person is not required to publish financial statements, the relevant tax authority would ascertain the profit margin from the published financial statements of a comparable company.
Read more:
– Chargeable Income & Benefit-in-kind
– The complete Personal Income Tax & computation guide
– The Nigeria Tax Reform Act 2025 – Top 18 Things to Know