The Presidential Fiscal Policy and Tax Reforms Committee has shed light on the new tax framework expected to take effect in 2026, assuring Nigerians at home and abroad that the reforms are designed to promote fairness, eliminate double taxation, and align the country with global best practices.
The clarifications, made by Committee Chairman, Taiwo Oyedele, address major concerns raised by Nigerians in the diaspora over how the new laws will impact remittances, remote work, and investments.
Here are the key takeaways:
1. Family remittances and gifts are not taxable
The ccommittee explained that genuine personal transfers such as family remittances, gifts, refunds, or community savings are not taxable income. Only income earned or deemed to be income, such as wages, business profits, or investment returns, will attract tax.
2. No double taxation for diaspora income
Income earned abroad and brought into Nigeria by non-residents will be exempt from tax in Nigeria, whether or not it has been taxed abroad. Nigeria also has double taxation agreements with several countries, and where such agreements do not exist, the new laws provide relief to ensure the same income is not taxed twice.
3. Residency based on 183-day rule
Tax residency will depend on whether an individual spends 183 cumulative days or more in Nigeria within a 12-month period. Non-residents will be taxed only on income derived from Nigeria, such as rental income, dividends, or business profits.
4. Diaspora Nigerians not taxed on foreign income
Nigerians living abroad who are not tax residents will not pay tax on their foreign employment or business income. Dual citizenship has no bearing on whether someone is tax resident in Nigeria.
5. Investment income and exemptions
Income from Nigerian investments will either be exempt, subject to capital gains tax, or withholding tax as a final tax. Government bonds, including Sukuk, remain tax-exempt. Capital gains tax applies to property sales excluding owner-occupied buildings. Share sales are exempt up to proceeds not exceeding ₦150 million and ₦10 million in gains per year.
6. Withholding tax rates
Dividends, non-government bond interest, and rental income will attract a 10% withholding tax, which may reduce to 7.5% for residents of countries such as the UK, South Africa, and China due to bilateral agreements.
7. Pensions and remote work
Pensions and stipends received from abroad are not taxed unless earned for work done in Nigeria. Remote workers will be taxed based on where they live or earn income, not just where payment is made.
8. Tax identification and filing
A Tax Identification Number (TIN) is not required unless an individual earns employment or business income from Nigeria. Non-residents without Nigerian-source income do not need to file annual returns. For those who do, simplified online channels like TaxProMax are available for easy compliance.
9. NGO and diaspora business provisions
Registered NGOs that operate strictly for charitable purposes will be tax-exempt, provided they comply with reporting and filing requirements. Diaspora-owned small businesses in Nigeria will be taxed like local enterprises but will benefit from available incentives and reliefs.
10. Transparency and accountability
The reforms also introduce transparency measures, including public reporting, oversight, and clear links between tax revenues and visible development projects, alongside safeguards against corruption and misuse of taxpayer data.
11. Incentives under the new law
The framework includes incentives for investments in key sectors such as agriculture, manufacturing, and the creative industries. SMEs will continue to enjoy corporate tax exemptions, while VAT exemptions on real estate transactions remain in place.
According to the committee, the new tax regime aims to simplify compliance, make the system more equitable, and ensure that tax revenues translate into improved public services and infrastructure for all Nigerians.
