Double Taxation Explained: Do Nigerians Abroad Pay Tax in Two Countries? 10 Things to Know
- Income earned by Nigerians abroad who work and earn without ties to the country will not be taxed
- This is part of the new tax law, and it also includes remittances, gifts and personal transfers
- Tax applies only to income derived from Nigeria, which includes business or outsourcing jobs for a company in Nigeria
Legit.ng journalist Dave Ibemere has experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
When Nigeria’s new tax reforms were announced ahead of their 2026 rollout, Nigerians living abroad expressed concerns, amplified by several social media posts, that foreign income and remittances would soon be taxed.
For many in the diaspora who regularly support family members back home, the fear was immediate and personal.
Source: Twitter
This was quickly debunked by the Presidential Fiscal Policy and Tax Reforms Committee in a clarification released on X that much of that concern is based on misinformation.
In a public education series titled “Separating Facts from Misinformation,” the committee sought to clarify what the law actually says and what it does not.
At the centre of the message is a simple point: income earned abroad and merely brought into Nigeria is not taxable.
What the new tax law states
For diaspora Nigerians, remittances are more than financial transfers; they are lifelines. From school fees and hospital bills to community development projects, billions of dollars flow into Nigeria annually from citizens living overseas.
The committee, chaired by tax expert Taiwo Oyedele, says these transfers remain outside the tax net.
The committee clarified.
“Genuine personal transfers such as family remittances, gifts, refunds or community savings contributions are not treated as taxable income."
It noted that only income that accrues in or is derived from Nigeria, such as rental income, dividends from Nigerian companies, or business profits earned locally, is subject to Nigerian tax.
In other words, sending money home does not create a tax liability.
Residency: The 183-day rule
Much of the confusion stems from how tax residency is determined.
Under the new tax law, residency is based on the 183-day rule, cumulative physical presence in Nigeria within 12 months. Individuals who do not meet this threshold are classified as non-residents.
The law clearly states that non-residents are taxed only on Nigerian-source income. What this means is a Nigerian software developer living in London, Toronto or Johannesburg who earns income abroad will not be taxed in Nigeria simply because funds are transferred home.
Dual citizenship also has no bearing on tax status. Residency, not nationality, determines liability, the committee explained
Double taxation: A longstanding concern
One of the strongest fears among the diaspora has been the possibility of being taxed twice, once in their country of residence and again in Nigeria.
Double taxation only arises when two countries claim taxing rights over the same income.
The committee says safeguards already exist.
It is reported that Nigeria maintains Double Taxation Agreements (DTAs) with several countries, including Belgium, Canada, China, France, the Netherlands, Pakistan, the Philippines, Romania, Singapore, Slovakia, South Africa, Spain, Sweden and the United Kingdom.
These treaties are designed to prevent the same income from being taxed in two jurisdictions. Where no treaty exists, Nigerian law's unilateral relief provisions offer protection.
By clarifying exemptions for non-residents and strengthening relief mechanisms, the law aims to reduce uncertainty and align Nigeria with international best practice.
Also, the Frequently Asked Questions report released by the Nigeria Revenue Service clearly stated that the law addresses double taxation by providing for unilateral relief and recognising double taxation agreements entered into by Nigeria, to prevent the same income from being taxed twice, Punch reports.
Source: Getty Images
It explained that Nigerian residents whose income has already been taxed abroad may claim relief on such income, subject to the applicable Nigerian tax rate and within the timeframe allowed by law.
NRS stated:
"The Act provides for unilateral relief and recognition of double taxation agreements to avoid double taxation on foreign-sourced income (Sections 120-123).
“A Nigerian resident whose income has been subjected to tax in a foreign jurisdiction may claim relief for such tax, subject to the applicable Nigerian tax rate and within the time allowed under the law.”
The report clarified the tax treatment of collective investment schemes, stating that they are considered companies for tax purposes. Income is taxed at the scheme level, while distributions to unit holders are treated as dividends for investors.
Additionally, the FAQs addressed concerns regarding foreign income, noting that dividends from wholly export-oriented businesses, as well as dividends, interest, rent, or royalties earned abroad and repatriated through approved channels, are exempt from Nigerian tax.
10 key tax points for Nigerians abroad
- Foreign income is not taxable for non-resident Nigerians earning abroad without ties to Nigeria.
- Remittances, gifts, and personal transfers are exempt from tax.
- Tax applies only to income derived from Nigeria, like rental income, dividends, or local business profits.
- Remote work for Nigerian companies or businesses tied to Nigeria may be taxable.
- Residency is based on the 183-day rule, not citizenship.
- Non-residents are taxed only on Nigerian-source income.
- Dual citizenship does not affect tax status.
- Double Taxation Agreements (DTAs) prevent the same income from being taxed twice.
- Unilateral tax relief applies where no treaty exists.
- Foreign income already taxed abroad may claim relief under Nigerian law.
NRS makes e-invoicing mandatory for businesses
In a related development, Legit.ng reported that Nigeria has taken a decisive step toward digital tax administration with the launch of a mandatory electronic invoicing system for large businesses.
The Nigeria Revenue Service has officially rolled out its Merchant Buyer Solution, known as MBS, requiring selected taxpayers to generate, validate and transmit invoices electronically in real time.
Out of an estimated 5,000 eligible firms nationwide, about 1,000 had already begun integrating with the platform within two weeks of launch.
Proofreading by James Ojo, copy editor at Legit.ng.
Source: Legit.ng
