How the estimate is calculated, and where it can be wrong
Rules version 2026.1, checked on 13 October 2026 against the Nigeria Tax Act 2025 (Act No. 7) and the Nigeria Tax Administration Act 2025 (Act No. 5), both in the Federal Government Gazette No. 117 of 26 June 2025. We read the copies Lagos State Internal Revenue Service publishes on its tax legislation page.
The calculation, step by step
| Step | Rule | Source |
|---|---|---|
| Who is taxed on worldwide income | A resident individual's income is chargeable "wherever [it] arise[s], and whether or not [it has] been brought into or received in Nigeria". | NTA s.12; residence test in s.202 |
| Foreign salary | Employment income is derived from Nigeria where the employee is resident. | NTA s.13(1)(a) |
| Freelance fees | Profit = fees less expenses "wholly and exclusively incurred in the production of the income". No deduction for private spending, capital items or taxes on income. | NTA s.20, s.21 |
| Foreign dividends, interest, rent, royalties | Exempt when "brought into Nigeria through approved channels"; otherwise taxable. | NTA s.163(1)(s) |
| Total income | Sum of the above and Nigerian income. | NTA s.28 |
| Eligible deductions | NHF, national health insurance, pension under the Pension Reform Act, interest on a loan for an owner-occupied house, life insurance or deferred annuity premiums, and rent relief of 20% of annual rent paid, capped at ₦500,000. | NTA s.30(2)(a) |
| Bands | First ₦800,000 at 0%; next ₦2,200,000 at 15%; next ₦9,000,000 at 18%; next ₦13,000,000 at 21%; next ₦25,000,000 at 23%; above ₦50,000,000 at 25%. | NTA s.58, Fourth Schedule |
| Minimum wage earners | Employment income at or below the national minimum wage is exempt. We use ₦70,000 a month (₦840,000 a year), the figure in the National Minimum Wage (Amendment) Act 2024 that the NTA refers to. | NTA s.58, s.163(1)(t) |
| Foreign tax credit | Credit = the lower of the Nigerian tax on the foreign income (Nigerian tax × foreign income ÷ total income) and the tax paid abroad. | NTA s.120 |
| Effective rate | Tax after credits ÷ total income. Monthly set-aside = tax after credits ÷ 12. | Our definition |
Exchange rates
We copy the Central Bank of Nigeria's published "central rate" once a day from cbn.gov.ng into rates.json (latest day, monthly averages, year-to-date average for USD, GBP and EUR). The Act requires foreign-currency expenses to be converted "at the official exchange rate published by the Central Bank of Nigeria for the relevant date or period" (NTA s.20(4)). For income there is no sentence as direct. Using the CBN rate on each payday is the most defensible record; the yearly average is a planning shortcut.
Worked examples you can check by hand
| Case | Chargeable income | Tax |
|---|---|---|
| $3,000 a month salary from abroad ($36,000) at ₦1,365, rent ₦2,400,000 (relief ₦480,000) | ₦48,660,000 | ₦10,121,800 |
| £20,000 freelance fees less £2,000 costs at ₦1,835, pension ₦600,000 | ₦32,430,000 | ₦6,388,900 |
| $50,000 salary at ₦1,400 with $5,000 tax paid abroad | ₦70,000,000 | ₦8,430,000 after credit (₦15,430,000 before) |
| ₦600,000 Nigerian salary only | ₦600,000 | ₦0 |
First case by hand: ₦2,200,000 × 15% = ₦330,000; ₦9,000,000 × 18% = ₦1,620,000; ₦13,000,000 × 21% = ₦2,730,000; (₦48,660,000 − ₦25,000,000) × 23% = ₦5,441,800. Total ₦10,121,800.
Known gaps and open questions
- Currency of assessment. NTAA s.39(1) says "tax shall be assessed in the currency of transaction" and s.39(2) that tax assessed in a foreign currency is paid in that currency. The bands are in naira, and no state has said how this applies to an individual paid in dollars. We compute in naira.
- Filing date. NTAA s.13 requires an annual return but the gazetted text does not print a date. 31 March comes from state practice (FCT-IRS public notice of 31 March 2026; LIRS press release of March 2025).
- Drafting errors. Professional firms published lists of errors in the Acts in January 2026 and the reform committee disputed some of them. We follow the gazetted words. If the Acts have been amended after 26 June 2025, version 2026.1 does not include it.
- Rent relief evidence. s.30(2)(a)(vi) allows the relief if you declare the actual rent "and other relevant information as may be prescribed by the relevant tax authority". The form of proof may differ by state.
- Business income timing. Business profit is assessed on the accounting period before the year of assessment (s.22), employment income on the year itself (s.26). For a freelancer whose books run January to December this makes no difference to the figure.
- Who must file. NTAA s.13(1) covers "every taxable person whether or not liable to pay tax". The NTAA defines a taxable person around economic activity and trade or business, more narrowly than the NTA (s.202). Employees are still told to file an annual return of income from all sources (NTAA s.14(3)), so we tell anyone resident with income to file.
- Life insurance timing. s.30(2)(a)(v) speaks of premiums paid "during the year preceding the year of assessment". We count premiums paid in 2026; your state may read it differently.
- Not covered: capital gains and crypto disposals, presumptive tax (s.29), companies, partnerships, non-residents, state levies outside income tax.
Other sources we used
- JRB and NRS notice "Nigerian Tax ID portal goes live effective January 1, 2026" (copy on lirs.gov.ng).
- FCT-IRS public notice "FCT-IRS extends deadline for filing of individual tax returns by one month", 31 March 2026, on fctirs.gov.ng.
- LIRS, steps for individual registration on eTax and for generating bills (lirs.gov.ng).
- Presidential Fiscal Policy and Tax Reforms Committee, "Fact not fear" #1 and #2 (copies on lirs.gov.ng/ntaa).
Found an error? Email octave@vread.fr with the section number. We correct and date every change on this page.
Change log
2026-10-13: version 2026.1 published.