Taxation of Non-Residents in Nigeria

The Nigeria Tax Act 2025 has clarified and expanded the legal basis for the taxation of non-residents in Nigeria. Under the Nigeria Tax Act 2025, non-resident persons can now be taxed under four broad categories, namely: Capital Gains, Profits, Consumption of Imported Services, and Premiums/Nigerian Source Income. We discuss these broad categories below.

1. Capital Gains
Non-resident persons are subject to Capital Gains Tax (CGT) in Nigeria if the gains arise from:

1. A trade, business, profession, or vocation carried on in Nigeria;

2. Any asset located in Nigeria; or

3. Any asset deemed to be located in Nigeria under the Act (e.g., shares in Nigerian companies or land in Nigeria).

2. Profits
Non-resident persons are subject to income tax if profits arise from a trade, business, profession, or vocation in Nigeria and if a non-resident has a permanent establishment or significant economic presence in Nigeria.

3. Consumption of Imported Services
Non-resident persons are subject to taxes in Nigeria in connection with payments made by a Nigerian resident or payments made by the permanent establishment of a non-resident company, for imported services which are provided to a person in Nigeria or to the permanent establishment of a non-resident company.   

Exemptions: Payments to non-resident entities are not taxable if they relate to:

1. Remuneration to an employee under a regular job contract;

2. Payment for teaching services in a school; or

3. Payments by a foreign permanent establishment of a Nigerian resident, if borne by the permanent establishment.

4. Premiums / Nigerian Source Income
Non-resident companies are subject to tax on payments for insurance premiums by a Nigerian resident or the Nigerian permanent establishment of a non-resident company, where the insured risks are located in Nigeria.

Conclusion

Nigeria’s taxation framework for non-residents reflects a targeted approach, focusing on the source and nature of income or gains arising in the country. Non-residents may be taxed on capital gains, profits, consumption of imported services, and Nigerian-source insurance premiums, while certain payments are expressly exempted to avoid double taxation or unnecessary burdens. These new rules provided for under the Nigeria Tax Act 2025, take effect from January 1, 2026, making it essential for foreign investors, companies, and service providers to plan ahead and ensure compliance when conducting business in Nigeria.