As global trade, remote work, and digital commerce continue to rise, more Nigerians are earning income from foreign sources whether as freelancers, digital entrepreneurs, multinational employees, or business exporters. What many fail to realize, however, is that Nigerian tax law does not stop at its borders. In fact, under Nigeria’s tax regime, your global income may be subject to tax in Nigeria regardless of where you earn it.
This article explains how Nigeria handles international tax obligations, including what income is taxable, applicable laws, and relevant case law that helps clarify the position of the courts.
The Legal Framework for International Taxation in Nigeria
The primary statute governing personal and corporate taxation in Nigeria is the Personal Income Tax Act (PITA) Cap P8 LFN 2004 (as amended) and the Companies Income Tax Act (CITA) Cap C21 LFN 2004 (as amended).
For Individuals:
Section 3(1) of PITA imposes tax on the “income of every individual… from all sources inside or outside Nigeria” provided the individual is resident in Nigeria.
A person is considered resident in Nigeria for tax purposes if they:
• Stay in Nigeria for 183 days or more in any 12-month period;
• Derive income from Nigeria;
• Have a “permanent home” in Nigeria.
This means a Nigerian software developer working remotely for a U.S. firm, or a Nollywood actor receiving royalties from abroad, is liable to Nigerian tax on that foreign income.
For Companies:
Under Section 9 of CITA, companies resident in Nigeria are taxed on their global profits, while foreign (non-resident) companies are taxed only on profits attributable to their Nigerian operations.
A company is considered resident if it is:
• Incorporated in Nigeria; or
• Managed and controlled in Nigeria.
This means a Nigerian company exporting agricultural products to Europe must declare all its profits including those from the foreign transactions as taxable income in Nigeria.
Double Taxation Treaties (DTTs)
To avoid being taxed twice on the same income, Nigeria has signed Double Taxation Agreements (DTAs) with about 14 countries, including the UK, Canada, South Africa, Belgium, China, and France.
These treaties typically cover:
• Withholding tax on dividends, interest, and royalties
• Taxation of business profits
• Relief mechanisms for residents of both countries
For example, if a Nigerian engineer receives consulting fees from a South African company and pays South African withholding tax, Nigeria will allow a foreign tax credit under the DTA to offset the Nigerian tax due on the same income.
Decisions Of Courts
Shell Petroleum Development Company v. Federal Board of Inland Revenue (FBIR) (1996) 8 NWLR (Pt. 466) 256
This landmark case affirmed the principle that Nigerian companies are taxed on profits accruing in, derived from, brought into, or received in Nigeria, even if generated abroad. The court emphasized that tax liability does not depend on the place of business alone, but also on the source and control of income.
FBIR v. Halliburton (WA) Ltd (2016) 24 TLRN 1
In this case, the Tax Appeal Tribunal held that even though certain technical services were rendered offshore by a foreign entity, the income was taxable in Nigeria because the contract was executed and enjoyed in Nigeria. This case illustrates how tax authorities analyze economic substance over physical presence.
Implications for Nigerians Earning Abroad
Many Nigerians working remotely or running global businesses wrongly assume that because the income was “earned abroad,” it escapes Nigerian tax. But under PITA, if you’re resident in Nigeria, you must report that income even if it’s not repatriated.
Failure to declare such income can result in:
• Tax assessments
• Interest and penalties
• Criminal liability in severe cases
The Voluntary Assets and Income Declaration Scheme (VAIDS) introduced in 2017 allowed taxpayers to regularize their global income, but the duty to disclose remains ongoing under the current regime.
What Do You Do ?
If you’re a Nigerian citizen or business with foreign income:
• Declare all global income on your annual tax returns
• Keep documentation of any foreign tax already paid for possible credit
• Engage a tax advisor to determine eligibility for relief under DTTs
• Consider legal restructuring if you’re running a business across multiple jurisdictions
Nigeria’s tax law makes it clear: tax follows residency, not geography. As international income becomes more accessible, Nigerian individuals and businesses must understand their tax obligations both locally and globally. Through compliance and strategic planning, you can minimize exposure, avoid penalties, and take full advantage of legal reliefs available under domestic law and tax treaties.
Speak to your lawyer or tax advisor today before the FIRS speaks to you
