Nigeria top income tax rate: 24%. Corporate tax: 30% (20% for medium enterprises, 0% for small companies with turnover under 25M NGN). VAT: 7.5%. Nigeria’s large economy, booming tech sector, and preferential small business tax rates attract African entrepreneurs, digital professionals, and investors seeking continental exposure with relatively favorable SME taxation.
Sources: OECD Tax Database 2024; Federal Inland Revenue Service (FIRS); official government sources.
Key Tax Data at a Glance
| Tax Type | Rate | Notes | Source | Year |
|---|---|---|---|---|
| Income Tax — top rate | 24% | 6 brackets from 7% to 24% on employment and business income | OECD | 2024 |
| Income Tax — lowest rate | 7% | On income above 300,000 NGN (~$202 USD) annually | OECD | 2024 |
| Corporate Tax | 30% | 20% for medium enterprises; 0% for small companies (turnover <25M NGN) | Official | 2024 |
| VAT (standard rate) | 7.5% | Applies to most goods and services; some exemptions for essential items | Official | 2024 |
| Capital Gains Tax | 10% | On disposal of capital assets and gains from investments | Official | 2024 |
| Social Security (employee) | 8% | Pension contribution to registered Pension Fund Administrators (PFAs) | Official | 2024 |
| Digital Nomad Visa | No | Work permit and residence classification required; tech entrepreneur visas available | Official | 2024 |
| Territorial Taxation | No (source-based) | Residents taxed on Nigeria-sourced income; worldwide income for resident corporations | OECD | 2024 |
Income Tax Brackets
Nigeria employs a progressive six-bracket personal income tax system with rates ranging from 7% to 24%. Tax residency is established through physical presence and economic ties to Nigeria. Employment income, business profits, and rental income are all subject to PAYE (Pay As You Earn) withholding for formal sector workers. Self-employed individuals and business owners must file annual returns with the FIRS and may claim business expense deductions.
| Annual Income (NGN) | Annual Income (USD approx.) | Tax Rate |
|---|---|---|
| 0 – 300,000 | 0 – 202 | 0% (exemption) |
| 300,000 – 600,000 | 202 – 405 | 7% |
| 600,000 – 1,100,000 | 405 – 744 | 11% |
| 1,100,000 – 1,600,000 | 744 – 1,082 | 15% |
| 1,600,000 – 3,200,000 | 1,082 – 2,164 | 19% |
| 3,200,000+ | 2,164+ | 24% |
Corporate Tax
Nigeria’s corporate tax structure incentivizes small business growth: companies with annual turnover under 25 million NGN (~$16,900 USD) pay 0% corporate tax; medium enterprises (25M–100M NGN turnover) pay 20%; large companies pay the standard 30% rate. This tiered approach has made Nigeria attractive for SME registration and startup operations. Dividend withholding tax is 10% for resident recipients and 15% for non-residents. Technology companies and export-oriented businesses may qualify for additional incentives.
VAT & Consumption Taxes
Nigeria’s VAT rate of 7.5% is one of Africa’s lowest, applied to most goods and services. Essential items such as raw foodstuffs, basic medicines, and some exported goods may be zero-rated or exempt. VAT registration is mandatory for businesses with annual turnover exceeding 25 million NGN, and businesses collect and remit VAT quarterly.
Capital Gains & Investment Income
Capital gains tax of 10% applies to profits from the sale of capital assets, property, and securities. Individuals may claim exemptions for gains on primary residence and certain government bonds. Dividend income is subject to a 10% withholding tax for residents and 15% for non-residents. Interest income from bonds and fixed deposits is taxed at 10% withholding at source.
Social Security
Employees contribute 8% of gross salary to the Nigerian pension system through registered Pension Fund Administrators (PFAs). Employers contribute an additional 10%. Self-employed individuals and business owners may voluntarily participate or contribute through informal arrangements. The pension contribution is a mandatory deduction and is used to fund retirement accounts held individually by workers.
Frequently Asked Questions
How much tax do expats pay in Nigeria?
Expats working in Nigeria are subject to PAYE withholding on employment income if classified as Nigerian residents. Residents pay progressive income tax from 7% to 24% depending on income level, plus 8% pension contributions. Many expats benefit from bilateral tax treaty provisions that reduce double taxation. Non-residents pay tax only on Nigeria-sourced income, typically at withholding rates applied at source.
Does Nigeria tax foreign income?
Nigeria uses a source-based taxation system: residents are generally taxed on Nigeria-sourced income, though corporations may be taxed on worldwide income. Non-residents pay tax only on Nigerian-source income. The definition of “Nigeria-source” is broad and includes income from businesses operating in Nigeria, payments for Nigerian services, and certain investment returns.
Is Nigeria a tax haven?
No. Nigeria is not classified as a tax haven and maintains OECD compliance. However, Nigeria’s SME tax incentives (0% corporate rate for small business) and vibrant economy with significant tech sector growth have attracted legitimate startups and remote-first companies seeking African market entry and tax-efficient operations.
What taxes do freelancers pay in Nigeria?
Freelancers and self-employed professionals must register with the FIRS and pay progressive income tax on net business income after deductions. The effective rate ranges from 7% at lower income levels to 24% at higher levels. VAT registration is mandatory once income exceeds 25 million NGN (~$16,900 USD) annually. Pension contributions are not mandatory for self-employed but may be voluntary.
How does Nigeria compare to neighboring countries for taxes?
Nigeria’s 24% top income tax rate is slightly higher than Ghana’s 30% top bracket but more progressive. Nigeria’s 7.5% VAT is significantly lower than Ghana’s 18.5% effective rate, making Nigeria more favorable for consumption-based taxation. Corporate tax incentives for SMEs (0% for small business) are more generous in Nigeria than Ghana, attracting startups and small enterprises.
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Sources: OECD Tax Database 2024; Federal Inland Revenue Service (FIRS); Ministry of Finance. Rates verified April 2026. Not financial advice — consult a qualified tax professional for individual situations.