What Nigeria’s New Tax Law Means for Freelancers and Remote Workers
- Chisom Ugonna
- Oct 21
- 5 min read
From January 2026, thousands of Nigerian freelancers and remote workers will begin paying income tax for the first time. This major shift follows the introduction of the Nigeria Tax Acts (NTA) 2025, which aims to broaden the country’s tax net and bring digital earners into the formal tax system.
If you work online as a designer, developer, writer, consultant, or remote employee, this new law affects you. Here is a clear breakdown of what it means, how it works, and how to stay compliant.
The Big Picture: Why This Law Matters
Nigeria’s tax system has historically focused on formal employees through the Pay-As-You-Earn (PAYE) structure, where employers deduct tax from employees’ monthly salaries. However, with the rapid growth of the digital economy and more Nigerians earning from global platforms, the government is extending the tax structure to include independent professionals and remote workers.
The goal is simple: to ensure that everyone earning income from or within Nigeria contributes their fair share to national development.
Who Is a “Resident” Under the New Law?
Your residency status determines whether you owe taxes in Nigeria.
According to the NTA, you are considered a Nigerian tax resident if any of the following apply:
You live in Nigeria permanently.
You have a permanent home or family in Nigeria.
You have substantial economic and family ties in Nigeria.
You spend 183 days or more in Nigeria within a 12-month period.
As Taiwo Oyedele, Chairman of the Presidential Fiscal Reforms Committee, explained:“If you are physically in Nigeria for more than 183 days in a year, Nigeria will consider you a tax resident. The country where you are tax resident has the first right to collect your income tax.”
What This Means
If you live and work abroad, you are not required to pay Nigerian tax on foreign income.
If you live in Nigeria, even if your clients are overseas, you are liable to pay tax on your worldwide income.
Who Must Pay (and Who Is Exempt)?
The law sets an income threshold for personal income tax.
Individuals earning ₦800,000 ($525) or less per year (after deductions) are exempt from paying personal income tax.
Individuals earning above ₦800,000 are required to pay tax based on their income bracket, up to a rate of 25% for those earning ₦50 million or more annually.
However, even if you are exempt, you are still required to file your annual tax return. This allows the government to determine whether you qualify for exemption.
How Freelancers and Remote Workers Should File Taxes
Freelancers and remote workers are responsible for handling their own taxes since they do not have employers to deduct PAYE on their behalf. The process involves the following steps:
Step 1: Register with the Tax Authority
Register with your State Internal Revenue Service (SIRS) or with the Federal Inland Revenue Service (FIRS) if your income is from federal sources.
Step 2: File a Self-Assessment
At the end of the year, declare your total income, deductions, and reliefs. Use this information to calculate your tax liability and submit your annual return by March 31 of the following year.
Step 3: Pay the Tax Due
After calculating your liability, make your tax payment through approved government channels.
Step 4: Keep Records
Maintain receipts, invoices, and proof of all deductible expenses. These records are essential in case of an audit or for claiming reliefs.
Penalties for Non-Compliance
The NTA introduces specific fines for individuals or companies that fail to comply with registration or filing requirements:
Failure to register for tax attracts a fine of ₦50,000 for the first month and ₦25,000 for each subsequent month.
Failure to file annual returns results in a fine of ₦100,000 for the first month and ₦50,000 for each subsequent month.
If a company hires an unregistered freelancer or contractor, it may face a fine of ₦5,000,000.
Compliance is therefore critical to avoid penalties and maintain good professional standing.
Double Taxation and How to Avoid It
For freelancers earning from clients abroad, there is a valid concern about double taxation — being taxed both in Nigeria and in another country.
Under the NTA, Nigeria taxes your worldwide income if you are a resident. However, some countries also tax foreigners who earn income from their jurisdictions. To address this, Nigeria has Double Taxation Treaties (DTTs) with 15 countries, including:
Belgium, Canada, China, Czech Republic, France, the Netherlands, Pakistan, the Philippines, Romania, Singapore, Slovakia, South Africa, Spain, Sweden, and the United Kingdom.
What This Means for You: If you earn income from a client in one of these countries, you will not be taxed twice. Typically, the country where the income originated will tax you first, while Nigeria will grant you tax relief or credit for that income.
If you earn income from a country without a DTT with Nigeria, such as the United States, you may be taxed in both countries. However, the NTA introduces a unilateral tax credit that allows you to offset the tax you already paid abroad against your Nigerian tax liability, provided you can show proof of payment.
Deductions and Reliefs You Can Claim
Freelancers and remote workers can reduce their taxable income by claiming legitimate business-related expenses.According to Taiwo Oyedele, “People who are not in paid employment have the opportunity for more deductions if they can demonstrate it is for their business.”
Examples of deductible expenses include:
Data and internet costs
Electricity or fuel used for work
Software subscriptions and tools
Marketing or advertising expenses
Work-related travel or logistics
Wardrobe or makeup expenses for creators and presenters
You can also deduct 20% of your annual rent or ₦500,000, whichever is lower.After deductions, if your total annual income falls below ₦800,000, you are not required to pay tax.
If a client or employer has already deducted Withholding Tax (WHT) from your payment, you can use that amount as a tax credit to offset part of your total liability when filing your annual return.
Benefits of Compliance
While the process of registering and filing taxes may appear demanding, compliance offers several long-term benefits:
Financial credibility: Proper tax records strengthen your reputation when applying for visas, grants, or business funding.
Business legitimacy: Registered freelancers are more likely to secure corporate or government contracts.
Access to reliefs: Filing correctly allows you to claim valid deductions and reduce your tax burden.
Peace of mind: Compliance helps you avoid penalties, audits, or legal challenges.
Practical Steps to Stay Compliant
Step | What to Do | Why It Matters |
1 | Register for a Tax Identification Number (TIN) | A TIN is required for all tax filings and payments. |
2 | Track your income and expenses | Ensures accuracy in self-assessment and deduction claims. |
3 | File returns before March 31 each year | Prevents penalties and keeps your records current. |
4 | Keep receipts and WHT documents | These serve as proof for deductions and credits. |
5 | Seek professional help if uncertain | Tax consultants can help you interpret specific provisions correctly. |
Nigeria’s 2025 Tax Act marks a significant step in aligning the country’s fiscal system with global standards. Freelancers, creators, and remote employees must now approach their work with the mindset of business owners rather than informal earners.
By staying informed, tracking income carefully, and filing on time, digital workers can remain compliant, avoid penalties, and strengthen their professional and financial standing in Nigeria’s evolving economy.