If you’re a Nigerian freelancer or remote worker earning income in 2026 and beyond, the tax conversion is one you cannot afford to skip. The Nigeria Tax Act (NTA), introduced in June 2025 and which has taken effect in January 2026, is reshaping how digital workers are taxed and the government is no longer looking away.
Here’s everything you need to know, broken down in plain language.
So, What Exactly Is the Nigeria Tax Act (NTA)?
The Nigeria Tax Act is a sweeping tax reform introduced by the Nigerian government to widen the country’s tax base and yes, that includes you.
The law mandates that every Nigerian tax resident is taxed on their worldwide income. Non-residents, on the other hand, are taxed only on income earned from Nigerian sources. This is a significant shift that pulls millions of digital workers into the formal tax system many of whom may have never filed a tax return in their lives.
Are You a Taxable Resident? Here’s How to Know
Under the NTA, you qualify as a Nigerian tax resident if any of the following apply to you within a tax year: you are domiciled in Nigeria; you have a permanent place of residence in Nigeria; you have substantial economic and family ties in Nigeria; or you are physically present in Nigeria for 183 days or more in a 12-month period.
Think of it this way — if you spent more than half the year in Nigeria, Nigeria considers you its tax resident, and it gets first dibs on taxing your income. Taiwo Oyedele, Chairman of the Presidential Fiscal Reforms Committee, made this crystal clear: “The country where you are tax resident has the first and priority right to collect your income tax.”
Now, here’s a common worry in the diaspora community; does this mean Nigerians living abroad must pay taxes on their foreign earnings? The short answer is no. If you live and work outside Nigeria, you have no obligation to pay taxes on income you earn abroad. Oyedele himself confirmed this at a session with the Nigerians in Diaspora Commission.
Tax Rates and Who Gets a Pass
Good news first: if your annual taxable income (after deductions) is ₦800,000 ($535) or below, you are exempt from paying personal income tax. That’s a meaningful relief for many entry-level freelancers.
For everyone else, the NTA uses a progressive tax band system — meaning the more you earn, the higher the rate on that portion of your income. Here’s how it breaks down:
- ₦0 – ₦800,000: 0% (tax-free)
- ₦800,001 – ₦3,000,000: 15%
- ₦3,000,001 – ₦12,000,000: 18%
- ₦12,000,001 – ₦25,000,000: 21%
- ₦25,000,001 – ₦50,000,000: 23%
- Above ₦50,000,000: 25%
Here’s the important bit though; even if your income falls below the taxable threshold, you are still required to file an annual return. The government wants a full picture of everyone’s earnings before deciding who owes what. Think of it as showing your income report card.
How Freelancers and Remote Workers Should File Their Taxes
Unlike salaried employees whose employers handle Pay-As-You-Earn (PAYE) deductions, freelancers and remote workers must handle tax filing themselves. Here’s the step-by-step process:
Step 1: Get a Tax Identification Number (TIN)
Visit the FIRS website or your State Internal Revenue Service office. You’ll need a valid ID, your BVN, and proof of address. Registration is free.
Step 2: Track Your Income All Year
Record every payment you receive — the date, amount, currency, and exchange rate at the time. Note that payments linked to your BVN are already visible to tax authorities through data-sharing agreements, so transparency is your best friend here.
Step 3: File a Self-Assessment Return
Using TaxPro Max (FIRS’s e-filing portal) or your State IRS website, declare all your income for the year, convert foreign earnings to Naira using CBN rates, subtract your allowable deductions, apply the progressive tax bands, and submit. The filing deadline is March 31 of the following year — so income earned in 2026 must be filed by March 31, 2027.
Step 4: Pay Your Tax
After FIRS reviews your return and issues a payment notice, pay via bank transfer or approved government channels. Keep your receipt.
What Happens If You Don’t Comply?
The NTA doesn’t play around with penalties. Here’s what non-compliance could cost you:
Failing to register for tax will cost you ₦50,000 in the first month of default and ₦25,000 for every subsequent month. If a company awards you a contract and you’re not registered, they face a fine of ₦5,000,000 — which means clients could refuse to work with unregistered freelancers. Filing incomplete or inaccurate returns carries a ₦100,000 fine in the first month and ₦50,000 monthly after that.
Double Taxation: How to Avoid Paying Twice
If you earn income from a foreign client or work done abroad, you might wonder, “will I get taxed twice”? Potentially, yes, but there are protections in place.
Nigeria currently has Double Taxation Treaties (DTTs) with 15 countries, including the UK, Canada, South Africa, France, the Netherlands, Singapore, and China. If you earn income from a country with a DTT, only one country gets to tax you — and you can claim a tax credit or relief to offset what was deducted at the source.
For countries without a DTT — like the United States — the NTA introduced a unilateral tax credit. This means if you can prove you already paid taxes on that income abroad, Nigeria will grant you a credit to offset your local tax liability on the same income. The key is documentation: keep records of every foreign tax payment.
Deductions and Reliefs: Legally Pay Less Tax
Here’s where it gets interesting for freelancers — you actually have more flexibility to claim deductions than a salaried employee does. According to Taiwo Oyedele, people outside paid employment have the opportunity for more deductions if they can demonstrate the expenses relate to their business.
As a freelancer or remote worker, you can deduct expenses like internet and data costs, electricity and fuel bills used for work, software subscriptions and tools, and 20% of annual rent paid (capped at ₦500,000). You can also deduct pension contributions (8% of income), National Housing Fund contributions (2.5% if applicable), and life insurance premiums up to ₦100,000.
For content creators, even your wardrobe and makeup can be deductible if you can show they’re part of how you generate income. The rule of thumb is simple: if it’s a legitimate business expense and you can prove it, claim it.
Also, if a client deducted Withholding Tax (WHT) before paying you, that amount can be claimed as a credit when filing your returns reducing what you actually owe.
The Bottom Line
Compliance with the new tax laws isn’t as complicated as it sounds. Register for your TIN, track your income diligently, claim every deduction you’re entitled to, and file before March 31. The earlier you start, the smoother the process will be and the less likely you’ll be scrambling when deadline season rolls around.
