Lagos
EY
UBA House, 10th and 13th Floors
57 Marina P.O. Box 2442
Marina Lagos Nigeria
Executive contact
Akinbiyi Abudu
Mobility contact
ey.com/globaltaxguides
+234 811-209-3005
Email: akinbiyi.abudu@ng.ey.com
Zion Athora, Tax, Social tax, +234 811-209-3045 Social Security and Private Email: zion.athora@ng.ey.com Client Services
Immigration contact
Kayode Faboyede +234 811-249-4364
Email: kayode.faboyede@ng.ey.com
A. Income tax
Who is liable. Residents are generally subject to tax on their worldwide income. However, foreign earnings derived by Nigerian residents are exempt from tax if the earnings are repatriated into Nigeria in convertible currency through a domiciliary account with an approved Nigerian bank. Income earned by a Nigerian from employment with the Nigerian government is considered Nigerian-source income, even if services are performed abroad. Nonresidents are subject to tax on Nigeriansource income only.
Individuals are considered residents if they are in one of the following categories:
• Nigerian and non-Nigerian individuals who reside in Nigeria
• Expatriate employees of a resident company who are present in Nigeria for employment purposes
• Expatriate employees of a nonresident company who are present in Nigeria for more than 183 days in a 12-month period
• Expatriate employees of a non-Nigerian company if their remuneration is recharged to a Nigerian company or borne by a fixed base in Nigeria and if they are not liable to tax in another country that has entered into a double tax treaty with Nigeria
Income subject to tax
Employment income. Taxable income includes salaries, wages, fees, allowances and other gains or profits from employment, such as bonuses, premiums, noncash benefits and other perquisites.
Gratuities paid to employees at the end of assignments are fully exempt from tax. Compensation for loss of office is also fully exempt from personal income tax. However, compensation for
Type of allowance
Amount of allowance the Nigerian Personal Income Tax Act.
Life insurance premiums (self) No limit
Any expenses proved to the satisfaction of the relevant tax authority to have been incurred by the individual on research during the period, including the amount of levy paid to the National Agency for Science and Engineering Infrastructure Act No limit
Business deductions. Expenses are deductible if they are reasonable and are incurred wholly, exclusively and necessarily in producing income. Expenses of a capital, private or domestic nature are not deductible.
Allowable expenses include the following:
• Interest on money borrowed and employed as capital in acquiring income
• Rental payments on business premises
• Repair and maintenance expenses
• Salaries, wages, allowances, utility costs and insurance premiums
• Bad debts
Any loss incurred in a previous year is deductible from the income of the same trade or business for up to four years.
Rates. The following rates apply to residents and nonresidents.
Minimum tax of 1% of gross income is due, even if applicable reliefs reduce tax liability below zero.
Individuals who earn the monthly minimum wage or below are exempted from any requirement to pay personal income tax or file a tax return.
Relief for losses. Business losses of a self-employed person may be carried forward for four years. Loss carrybacks are not allowed.
B. Inheritance and gift taxes
Nigeria does not impose inheritance and gift tax.
C. Social security
Pension. The mandatory minimum contribution to the Nigerian Pension Scheme is 18% of an employee’s monthly emoluments. Employers and employees are required to make contributions of
Business visas are issued to visitors and investors coming to Nigeria for discussions or meetings relating to business purposes. Any form of work-related activity is prohibited for holders of this visa. An extension of stay in Nigeria is permissible subject to NIS approval, and relevant statutory fees may apply.
A few years ago, the federal government introduced the Visa on Arrival (VOA) program to promote foreign direct investment and to ease doing business in Nigeria. The VOA program facilitates expedited entry into Nigeria for top executives of multinationals, high net worth private investors and business travelers from countries where no Nigerian consulates are located. In addition, consideration is given to other business travelers who need to urgently attend meetings, seminars and conferences in Nigeria on short notice. The approval of this facility is at the sole discretion of the Comptroller General (CG) of the NIS.
Temporary work permit (TWP) visas are issued to expatriates with specialized skills for work on short-term specific projects that are based in Nigeria. The visa application process is initiated in Nigeria by obtaining a local approval (a TWP pre-approval) for up to two months, which is granted by the CG of the NIS. The expatriates then present the approval, together with other supporting documents at the relevant Nigerian consulate abroad. An extension of stay in Nigeria is permissible subject to NIS approval, and relevant statutory fees may apply. For further details regarding the TWP visas, see Section G.
The subject-to-regularization (STR) visa is issued to expatriate assignees (including their dependents if applicable) who will be coming to work and live in Nigeria on a long-term basis. Expatriate assignees on this work visa platform are expected to be placed in the host company’s approved Expatriate Quota (EQ) positions. On arrival in Nigeria, a Combined Resident Permit and Alien Card (CERPAC) is issued to an expatriate assignee as a temporary resident permit receipt. Subsequently, a Green Card, which is a permanent resident permit, is expected to be issued within 90 days.
G. Work permits and self-employment
The federal government, through its relevant agencies, regulate the employment of expatriates in Nigeria to ensure that the right skills are imported or transferred and, at the same time, to promote employment opportunities for qualified Nigerians. Applications for entry visas into Nigeria are screened for security as well as the potential for foreign direct investment.
The TWP visa application process is initiated in Nigeria by obtaining an electronic TWP pre-approval from the headquarters of the NIS. Specific information about the expatriate, including a copy of the international passport data page, the nature of assignment to be performed and country of visa application must be well articulated in the application. On approval of the CG of the NIS, a TWP pre-approval is issued for presentation at the relevant Nigeria consulate abroad.
The following documents are generally required to process a TWP visa application:
• Completed visa application form
• International passport with a minimum of six months’ validity and with two blank facing pages
Requirements may vary slightly among Nigerian embassies in different countries.
STR visas are granted for three months. The required documents must be approved and endorsed by the Nigerian embassy abroad and given to the expatriate in a sealed envelope, for presentation to the NIS on the expatriate’s arrival in Nigeria. The host company must present these documents to the NIS together with a CERPAC usually referred to as a temporary residence permit and an application letter for “Regularization of Stay.” On approval of the CG of the NIS, a permanent residence permit (Green Card) is issued.
The CG of the NIS abolished the use of re-entry visas (single and multiple re-entry visas) by resident expatriates, effective from 6 March 2015. Consequently, resident expatriates can commute in and out of Nigeria based on endorsed CERPACs or valid Green Cards. Expatriates employed in Nigeria are issued CERPACs on application for regularization of stay, which must be made within three months of arrival in the country. Permanent resident permits (Green Cards) are issued on completion of this process.
Expatriates may transfer from one company to another if the prior consent of the NIS is obtained. To obtain consent, the previous employer must signify in writing it has no objection to the change of employment, and the new company then applies to the NIS for the transfer of the expatriate.
Economic Community of West African States (ECOWAS) nationals are exempted from EQ conditions and are only required to obtain ECOWAS residence cards for work purposes. This type of residence permit is valid for two years, subject to the validity of the assignee’s international passport.
All resident expatriates or visitors who wish to remain in Nigeria for a period of more than 90 days must complete the migrant e-registration process, as mandated by the federal government.
Foreign nationals may establish businesses in Nigeria and own up to 100% of the share capital of their companies. Companies that are partly or wholly owned by foreign nationals must be registered with the Nigerian Investment Promotion Commission or the FMI in Abuja after incorporation.
H. Migrant e-registration
Migrant e-registration is applicable to expatriates who intend to stay in Nigeria for a period of 90 days or longer.
NIS launched the e-registration scheme to achieve an effective tracking mechanism for migrants in Nigeria, as well as address some of the security challenges being experienced in the country. The registration process applies to all resident expatriates and their dependents, as well as visitors on tourist, business and TWP visa platforms who will be staying in Nigeria for over 90 days.
The above directive is in line with provisions of the Immigration Regulations 2017, which stipulates that “Foreigners who intend
to stay in Nigeria beyond ninety (90) days are mandated to undergo a biometric registration, in person, at the Immigration office.” The procedure entails the collection of fingerprints and facial capture, culminating in the issuance of a migrant registration slip that would indicate the expatriate’s migrant/alien number.
A copy of the e-registration slip is now required for residence permit issuance and renewal purposes at the NIS office. Therefore, all expatriates are expected to comply in this regard on arrival in Nigeria.
I. Family and personal considerations
Family members. Family members of expatriates must show evidence of their relationships, including marriage certificates and birth certificates. Dependents above 18 years of age are also issued CERPACs. Dependent minors are issued “Minor” immigration status endorsements, subject to the validity of their parents’ residence permits. This allows them travel in and out of the country. Dependent minors are permitted to attend public or private schools.
A dependent with CERPAC status may be employed by a Nigerian company if he or she is at least 18 years of age, with requisite academic qualifications and if the company has vacant expatriate quota positions. An application is forwarded by the Nigerian company to the NIS with copies of the applicant’s résumé and academic professional certificates. On NIS approval of the application, the status of the applicant is upgraded from the status of dependent to principal residence expatriate.
Driver’s permits. Foreign nationals are not permitted to drive legally in Nigeria with their home country driver’s licenses. They must have international driver’s licenses or prove that they have applied for Nigerian driver’s licenses.
Nigeria does not have driver’s license reciprocity with any other country. Foreign nationals must apply for Nigerian driver’s licenses after obtaining their residence permits.
The following documents must be submitted with an application form and payment of the necessary fee to obtain a driver’s license:
• A copy of the residence permit
• A copy of the foreign driver’s license
• Two passport-size photographs
• The applicant’s blood group
• Evidence of good eyesight
No actual driving test is required of a license applicant. However, a physical examination is conducted if considered necessary by the issuing authority.