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Beginning in January 2026, Nigerians earning income from foreign clients will be required to pay tax. Essentially, freelancers and remote workers who fall under the new rules will pay tax as designed by the government, which has capped the maximum rate at 25%. However, this new Nigerian remote work tax is still lower than what South Africa, Kenya, Egypt, and Algeria charge. Incidentally, South Africa also rolled out social media influencer and digital tax policies recently.
TechPolyp notes that the new system became law in June 2025. And the target is to expand tax revenue and improve compliance. It is also worth noting that Nigeria aims to increase the tax-to-GDP ratio to 18 per cent by 2027, in an effort to move it from its current position, which is below 10 per cent, one of the lowest in Africa. This development further confirms Nigeria’s strong willingness to shifting its focus from oil earnings to tax revenues.
Additionally, the Nigerian remote work tax laws apply to all income earned by Nigerian residents. Importantly, it includes salaries, freelance earnings, and profits from contracts. Whether the money enters Nigeria or not, it is now subject to taxation in Nigeria. The rules are spelt out clearly in Chapter Two of the Tax Law.
Forging ahead, the section states that the income “of a resident is deemed to accrue in Nigeria and is chargeable to tax.” Additionally, partial duties performed in Nigeria count as taxable work. Similarly, the law also extends to Nigerians abroad. If their host country has a double taxation treaty, any tax paid there is credited in Nigeria. However, as it stands, current treaties cover the UK, USA, Canada, France, and Singapore.
Nigeria Remote Work Tax: What Freelancers Should Expect
The Nigerian remote work tax will change how freelancers manage income. For example, a remote worker earning $2,000 per month will face approximately 23 per cent in tax. By implication, annual taxes will be calculated after specific deductions. In the same vein, allowable items include pensions, housing, health contributions, and dependants’ relief.
Moreover, rent relief is fixed at 20 per cent, but capped at ₦500,000 yearly. The law uses progressive rates, meaning low earners pay less while higher earners carry a heavier share. According to the government, this projection strikes a balance between fairness and revenue needs.
In the future, freelancers cannot expect clients to withhold Nigerian taxes on their behalf. In addition, foreign firms have no legal duty to deduct for them. This implies that every remote worker must register with the Federal Inland Revenue Service and must file yearly self-assessments as a result of the new Nigerian remote work tax.
Failure to register draws a fine of ₦50,000. On the other hand, not filing tax returns leads to steeper penalties. Similarly, false income declarations risk fines of ₦1 million or a prison term of up to three years.
Compliance and Consequences
TechPolyp notes that the new law ensures freelancers can no longer avoid taxation. It’s noteworthy that many remote workers have operated in the shadows for years. However, the Nigeria Revenue Service will now track foreign payments more closely. To expose remote workers, banks, payment processors, and digital platforms are expected to share data.
Undoubtedly, this development generates an uproar, but experts warn that ignorance will not be an excuse. Freelancers who fail to comply may face audits and enforcement actions. For many, the safest move is to declare earnings and pay early.
Be that as it may, Nigeria’s remote work tax is more than a policy. It demonstrates Nigeria’s efforts to modernise its tax system. Given the reality of incorporating freelancers and digital workers into the workforce, the government is expected to fund infrastructure and public services more sustainably.