Nigeria Tax Reforms For Non-Residents: Expatriate & Foreign Company Guide

Introduction

On 26 June 2025, President Bola Ahmed Tinubu signed four landmark laws, the Nigeria Tax Act, 2025 (NTA), the Nigeria Tax Administration Act, 2025 (NTAA), the Nigeria Revenue Service (Establishment) Act, 2025 (NRSA), and the Joint Revenue Board (Establishment) Act, 2025 (JRBA) collectively known as the Tax Reform Acts. Together, they repeal and consolidate Nigeria’s fragmented tax legislation, including the Companies Income Tax Act, Personal Income Tax Act, Petroleum Profits Tax Act, Value Added Tax Act, Capital Gains Tax Act and Stamp Duties Act, into a single, modernised framework. The reforms took effect from 1 January 2026.

For non-resident individuals and companies, foreign investors, expatriate employees, offshore parent companies, digital service providers, and foreign shareholders the reforms change the rules of engagement significantly. This article is a practical breakdown of what has changed and what non-residents need to do.

Notable provisions of the Tax Reform Acts

1. Nigeria has moved to a clearer residency-based tax model

Under the NTA, Nigerian tax residents are now taxed on worldwide income, while non-residents remain taxable only on Nigerian-sourced income.¹ Residency for individuals is determined by domicile, habitual abode, family and economic ties, or physical presence in Nigeria for at least 183 days in a 12-month period.

The Act also widens the definition of a “Nigerian company” to capture foreign-incorporated entities that are effectively managed or controlled from Nigeria, meaning such entities can be pulled into Nigeria’s worldwide-income tax net even though they are registered abroad. Non-resident individuals and boards that direct Nigerian operations from overseas, or vice versa, should reassess where effective management actually sits.

2. Permanent Establishment (PE) and “Significant Economic Presence” (SEP) rules are broader

Part III of the NTA deals specifically with the taxation of non-resident persons. When a non-resident company is deemed to have a Permanent Establishment or a Significant Economic Presence (SEP) in Nigeria, and therefore a Nigerian tax liability, even without a physical office.²

Notably, Section 17(9)(b) provides that a non-resident person has an SEP in Nigeria where it transmits or sends signals, data, images or messages into Nigeria in connection with activities such as e-commerce, app stores, high-frequency trading, cloud computing, online gaming, digital content, search engines, online advertising and payments, and online teaching, provided profit is attributable to that activity. This squarely brings foreign digital and platform businesses serving Nigerian users within the tax net.

A limited carve-out exists: a non-resident is not deemed to have a PE or SEP solely because it employs persons resident in Nigeria, provided those employees’ duties are not performed primarily for Nigerian customers.³

3. Capital Gains Tax now catches indirect and offshore share transfers

Previously, a non-resident selling shares in an offshore holding company that merely owned a Nigerian subsidiary largely escaped Nigerian tax. That gap is now closed. Under the NTA, gains from the indirect transfer of shares in a Nigerian company are chargeable to tax in Nigeria where the disposal changes the ownership structure or group membership of the Nigerian company, or the ownership of a Nigerian-situate asset.⁴

Foreign shareholders restructuring offshore holding chains, selling stakes in Nigerian portfolio companies, or engaging in group reorganisations should now factor in Nigerian CGT exposure even where the transaction is executed entirely offshore.

4. Employment income of expatriates: narrower exemption

The broad exemption non-resident employees previously enjoyed under the Personal Income Tax Act has been significantly narrowed. A non-resident individual’s employment income is taxable in Nigeria unless the employee is not resident in Nigeria and either does not perform duties in Nigeria, or performs duties in Nigeria but is taxed on that income in their home country of residence.⁵ In practice, expatriates who work in Nigeria without evidence of tax paid at home on that income can now expect to be taxed in Nigeria on it.

5. VAT: non-resident suppliers must now register, charge, and remit

For the first time, non-resident persons (NRPs) supplying taxable goods or digital services to persons in Nigeria are required to register for VAT with the Nigeria Revenue Service (NRS), charge VAT on their invoices, and remit it⁶, obligations that began from 1 January 2026. The VAT rate itself remains unchanged at 7.5%.

Where an NRP supplies from outside Nigeria and has not registered or charged VAT, Section 151 of the NTA shifts the obligation to the Nigerian recipient, who must withhold the VAT due and remit it to the NRS a reverse-charge-style backstop.

6. Withholding tax, TIN registration and other administration duties

The NTAA, the administrative companion to the NTA, imposes fresh compliance duties on non-residents:

• Mandatory TIN registration: non-resident persons making taxable supplies to individuals in Nigeria, or deriving Nigerian income (other than passive investment income), must register for tax and obtain a Tax Identification Number (TIN).
• Withholding tax on dividends and service fees: Sections 19 of the NTA and 51 of the NTAA govern withholding tax applicable to payments of dividends, interest, royalties and service fees to non-residents.⁷
• Electronic Fiscal System (EFS): taxable persons, including registered non-residents, must maintain accurate transaction records through Nigeria’s new EFS for digital tax administration.
• Sector-specific filing deadlines: for example, royalty and withholding remittances for non-resident shipping and airline companies fall due by the 21st of the following month.
• 4% Development Levy: this new levy applies to the assessable profits of companies generally, but non-resident companies (and small companies) are expressly excluded from it.

7. Minimum Effective Tax Rate and undistributed profits of controlled foreign entities

Where a non-resident company is a subsidiary of, or part of a multinational group involving, a Nigerian parent company, and the foreign subsidiary’s effective tax rate falls below Nigeria’s prescribed minimum, the Nigerian parent may be required to pay a top-up amount, broadly in line with global minimum-tax (Pillar Two-style) principles. Separately, undistributed profits of a non-resident company controlled by a Nigerian company can, in specified circumstances, be treated as distributable, and therefore taxable, even without an actual distribution. Groups with Nigerian parents and offshore subsidiaries should review their structures for exposure.

What non-residents should do now

1. Re-assess residency and PE/SEP exposure: Map where your business derives value from Nigerian users, customers, or platforms, and whether your activities now create an SEP or PE under Section 17 of the NTA.
2. Audit offshore holding structures: If a Nigerian company sits anywhere in your ownership chain, review whether a future disposal higher up the chain could trigger Nigerian CGT on an indirect transfer.
3. Register for VAT where required: or confirm that your Nigerian customers are properly withholding VAT on your behalf under Section 151 of the NTA.
4. Obtain a TIN: if you are a non-resident person deriving Nigerian-sourced income or supplying taxable goods/services to persons in Nigeria.
5. Review expatriate employment arrangements: confirm which employees now fall outside the narrowed non-resident exemption, and whether home-country tax evidence is available to preserve exemption where duties are performed in Nigeria.
6. Check withholding tax rates and treaty relief applicable: to dividends, interest, royalties and service fees paid out of Nigeria, and confirm documentation is in order to claim any applicable double-tax-treaty benefits.
7. Review group structures against the minimum effective tax rate rules: if you have a Nigerian parent or Nigerian-linked multinational group.

Conclusion

Nigeria’s 2025 Tax Reform Acts significantly reshape the tax obligations of non-residents, foreign investors, and expatriates. With expanded rules on residency, Significant Economic Presence, VAT, and tax administration, businesses must reassess their structures and ensure compliance. Proactive tax planning and professional advice are essential to managing these obligations and protecting commercial interests in Nigeria.

Footnotes

1 Section 12 of Nigeria Tax Act 2025

2 Section 17 of Nigeria Tax Act 2025

3 Section 17(9)(c) of Nigeria Tax Act 2025

4 Section 47 of Nigeria Tax Act 2025

5 Section 13(2) of Nigeria Tax Act 2025

6 Section 151 of Nigeria Tax Act 2025

7 Section 19 of Nigeria Tax Act 2025 & Section 51 of Nigeria Tax Administration Act 2025

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.