What you need to know as a foreign national who is resident in Nigeria and from countries with which Nigeria has Double Taxation Agreements (DTAs) under the new Nigeria Tax reform Acts, 2025.

This article provides guidance on assessing foreign nationals who are resident in Nigeria and from countries with which Nigeria has Double Taxation Agreements (DTAs). The assessment framework is primarily governed by the Nigeria Tax Act, 2025 and the Nigeria Tax Administration Act, 2025.

1. NIGERIA’S DOUBLE TAXATION AGREEMENTS

Nigeria currently has DTAs with Belgium, Canada, China, Czech Republic, France, the Netherlands, Pakistan, Philippines, Romania, Singapore, Slovakia, South Africa, Spain, Sweden, and the United Kingdom.

Key Point: Treaties with Kenya, Mauritius, Poland, and South Korea have not yet been ratified by the National Assembly.

2. RESIDENCE DETERMINATION FOR FOREIGN NATIONALS

Specific Legal Provisions:

Section 12 – Nigeria Tax Act, 2025 (Resident Individual):

“The income, gains or profits of an individual who is a resident of Nigeria are deemed to accrue in Nigeria and are chargeable to tax in Nigeria wherever they arise, and whether or not the income, profits or gains have been brought into or received in Nigeria.”

Residence Test: A foreign national is considered a resident in Nigeria if they are:

• Physically present in Nigeria for at least 183 days (including leave and temporary absence) in any 12-month period, OR
• Serving as a diplomat or diplomatic agent of Nigeria abroad

3. TAXATION OF EMPLOYMENT INCOME FOR FOREIGN NATIONALS

Section 13 – Nigeria Tax Act, 2025 (Employment Income)

The income from employment is derived from Nigeria where:

1. a) Primary Rule:

• The employee is a resident of Nigeria, OR
• The duties are wholly or partly performed in Nigeria AND the remuneration is:
  • Paid by or on behalf of an employer who is resident in Nigeria
  • Borne by a Nigerian permanent establishment of a non-resident employer
  • Not liable to tax in the employee’s country of tax residence

1. b) Exemption for Non-Residents (Section 13(2)): Employment income of a non-resident employee shall NOT be taxed in Nigeria where:

• The employer is a start-up or engaged in technology-driven services or creative arts, AND
• The employment income is taxable in the employee’s country of tax residence

4. DOUBLE TAXATION RELIEF

Chapter Four – Nigeria Tax Act, 2025

Section 120 – Unilateral Relief: Where Nigeria has no DTA with a country, unilateral relief may be granted for foreign taxes paid.

Section 121 – Double Taxation Agreement: Where a DTA exists, the treaty provisions apply to prevent double taxation.

Section 122 – Method of Calculating Relief:

“Foreign tax payable in respect of income in a country with which Nigeria has a DTT is allowed as a credit against tax payable in respect of that income in Nigeria.”

Administrative Requirement: There is an administrative process to obtain treaty benefits – taxpayers must apply for and demonstrate eligibility.

5. INCOME TAX RATES FOR INDIVIDUALS

Section 58 – Nigeria Tax Act, 2025

Tax rates for individuals are specified in the Fourth Schedule of the Nigeria Tax Act, 2025. The progressive tax rates apply to chargeable income (total income less eligible deductions).

 Eligible Deductions (Section 30) include:

• National Housing Fund contributions
• National Health Insurance Scheme contributions
• Pension contributions under the Pension Reform Act
• Interest on loans for owner-occupied residential housing
• Life insurance premiums for self or spouse
• Rent relief of 20% of annual rent paid (maximum ₦500,000)

6. KEY ASSESSMENT CONSIDERATIONS

For Foreign Nationals Resident in Nigeria:

1. a) Worldwide Income Taxation: If determined to be resident (183+ days), the individual is subject to tax on worldwide income regardless of where earned or received.
2. b) DTA Relief Application:

• Must demonstrate tax residency in treaty country
• Must show that income has been taxed in the other jurisdiction
• Foreign tax paid serves as a credit against Nigerian tax liability
• Cannot claim double benefit

1. c) Income Characterization: Different rules apply for:

• Employment income (Section 13)
• Business/professional income
• Investment income
• Capital gains

For Non-Resident Foreign Nationals:

Section 17 – Non-Resident Person: Only Nigeria-source income is taxable, including:

• Services performed in Nigeria
• Income from Nigerian permanent establishment
• Rental income from Nigerian property
• Gains from disposal of Nigerian assets

   7. PRACTICAL ASSESSMENT FRAMEWORK

Step 1: Determine Residence Status

• Count days of physical presence in Nigeria
• Include temporary absences and leave days
• Consider any diplomatic status

Step 2: Identify Income Sources

• Employment income location
• Business income attribution
• Investment income source
• Capital gains location

Step 3: Apply DTA Provisions

• Verify if DTA exists with taxpayer’s home country
• Review specific treaty articles on income types
• Determine primary taxing rights
• Calculate foreign tax credit

Step 4: Compute Chargeable Income

• Aggregate all taxable income
• Deduct eligible reliefs (Section 30)
• Apply appropriate tax rates (Fourth Schedule)
• Offset foreign tax credits

Step 5: Withholding Tax Obligations

Under Section 51 of the Nigeria Tax Administration Act, 2025, certain payments are subject to withholding tax, which may be final tax for non-residents.

8. DOCUMENTATION REQUIREMENTS

Foreign nationals claiming DTA benefits must provide:

• Tax residency certificate from home country
• Evidence of foreign tax paid
• Employment contracts and work location details
• Records of days present in Nigeria
• Bank statements showing source and receipt of income

9. COMPLIANCE OBLIGATIONS

Filing Requirements:

• Annual tax returns must be filed
• Pay-As-You-Earn (PAYE) deductions for employment
• Self-assessment for other income
• Proof of foreign tax payments for credit claims

10. RELEVANT LEGAL REFERENCES SUMMARY

Section	Act	Subject Matter
Section 12	Nigeria Tax Act, 2025	Resident Individual – Worldwide taxation
Section 13	Nigeria Tax Act, 2025	Employment Income – Source rules
Section 17	Nigeria Tax Act, 2025	Non-Resident Person – Nigerian source income
Section 30	Nigeria Tax Act, 2025	Chargeable Income – Eligible deductions
Section 58	Nigeria Tax Act, 2025	Individual tax rates
Sections 120-123	Nigeria Tax Act, 2025	Double Taxation Relief
Section 51	Nigeria Tax Administration Act, 2025	Withholding tax provisions

CONCLUSION

The assessment of foreign nationals resident in Nigeria requires careful consideration of residence status, income source rules, and applicable DTA provisions. The Nigeria Tax Act, 2025 provides a comprehensive framework for determining tax liability while preventing double taxation through foreign tax credits for residents of treaty countries.