The Federal Government’s new tax reforms, which take effect in 2026, have sparked widespread questions among Nigerians abroad. Many have wondered whether their remittances, pensions, or foreign earnings would now be taxed under the new fiscal framework.
To address these concerns, the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Mr Taiwo Oyedele, released a detailed clarification this week — explaining what the reforms truly mean for Nigerians living and working overseas.
According to the Committee, Nigerians abroad sending money home to support their families have nothing to fear. Family remittances, gifts, refunds (such as ticket reimbursements), and cooperative contributions will not be subject to tax.
“Only income that is earned or deemed to be income — such as salaries, business profits, and investment returns — is taxable,” the Committee clarified. Every individual, however, is still expected to self-report any taxable income and pay tax where applicable.
A major highlight of the reforms is the abolition of double taxation on foreign earnings. The new law explicitly exempts income earned abroad and brought into Nigeria from taxation — even if such income was not taxed in the country where it was earned.
Nigeria also has Double Taxation Agreements (DTAs) with several countries, while a unilateral relief mechanism will apply where no DTA exists. This ensures that the same income will never be taxed twice.
Tax residency, the Committee explained, is determined by the 183-day rule — that is, if an individual stays in Nigeria for a total of 183 days or more within a 12-month period, they become a tax resident.
Non-residents, therefore, will only be taxed on income derived from Nigeria, such as rental earnings, dividends, or profits from local business operations. Dual citizenship, the Committee noted, has no bearing on tax status.
Under the new framework, the tax treatment of investments has also been streamlined.
Government bonds — including Sukuk — remain tax-exempt.
Capital Gains Tax (CGT) applies to sales of real estate, except owner-occupied properties.
Gains from share sales are exempt up to ₦150 million in proceeds or ₦10 million in annual profit.
Dividends, rental income, and non-government bond interest attract a 10% withholding tax, which may be reduced to 7.5% under specific tax treaties with countries such as the United Kingdom, China, and South Africa.
Pensions, Remote Work, and Income Source
On the increasingly common issue of remote work and pensions, the Committee stated that only income generated in Nigeria is taxable for non-residents.
Pensions or stipends from abroad will not attract tax in Nigeria unless they relate to work done within the country.
Similarly, remote workers are taxed according to the tax laws of the country where they are resident or where their income arises — not simply where payment is made.
Tax Identification and Filing Requirements
To ease compliance, the reforms simplify the process of obtaining a Tax Identification Number (TIN) and filing returns.
Non-residents without Nigerian-source income are not required to file tax returns.
Those with taxable employment or business income in Nigeria must file annually.
A TIN can be obtained online through the Joint Tax Board (https://tin.jtb.gov.ng), while companies now receive automatic TINs upon registration with the Corporate Affairs Commission (CAC).
Diaspora-owned small and medium enterprises (SMEs) in Nigeria will be taxed like local businesses but will also qualify for government incentives and reliefs available to small firms.
Registered non-governmental organisations (NGOs) operating strictly for charitable purposes will continue to enjoy tax exemption — provided they comply with reporting and filing obligations.
In a bid to rebuild public trust, the Committee disclosed that the reforms include transparency provisions mandating public reporting, governance oversight, and safeguards against misuse of tax revenues.
It assured Nigerians that every tax naira would be tied to visible service delivery and infrastructure projects, with punitive measures in place for any abuse of taxpayer data or corruption in collection systems.
The reform package also introduces new investment incentives, especially for diaspora-led projects in critical sectors like agriculture, manufacturing, and the creative industry.
These include:
SME corporate tax exemptions for eligible firms.
VAT exemptions on real estate transactions.
Priority-sector incentives for long-term investors.
According to Mr Oyedele, the overarching goal is to create a fairer, simpler, and globally competitive tax regime that encourages compliance and attracts diaspora investment.
In his words, the new system seeks to “remove ambiguity, prevent double taxation, protect remittances, and ensure that every Nigerian — at home or abroad — understands where, when, and how they are required to pay tax.”
With implementation set for 2026, experts say the success of these reforms will depend on effective communication, institutional transparency, and the government’s ability to demonstrate that tax revenues are genuinely improving citizens’ lives.
