The Presidential Fiscal Policy and Tax Reforms Committee has released a detailed clarification to ease concerns raised by Nigerians in the diaspora over the upcoming tax reforms set to begin in 2026.
The statement, signed by the committee’s chairman, Taiwo Oyedele, was made public on Thursday, October 30, 2025.
Remittances and Gifts Not Taxable
According to the committee, personal transfers such as family remittances, gifts, refunds, and community savings contributions will not be subject to taxation.
“Genuine personal transfers like family remittances, gifts, refunds, or community savings are not taxable income,” the document explained.
Only legitimate income sources—such as salaries, business profits, and investment earnings—will attract tax, and individuals are expected to declare such income themselves.
No Double Taxation on Foreign Income
To address fears of double taxation, the committee clarified that Nigerians living abroad who are not considered tax residents in Nigeria will not pay tax on their foreign employment or business income.
“Income earned abroad and brought into Nigeria by non-resident individuals is now specifically exempted from tax in Nigeria, regardless of whether tax was paid abroad,” the statement said.
It further explained that Nigeria’s Double Taxation Agreements (DTAs) with several countries would continue to protect Nigerians overseas from being taxed twice. In cases where no DTA exists, a unilateral relief has been introduced.
Tax residency, the committee added, will be determined using the “183-day rule.”
“Residency depends on physical presence in Nigeria for 183 cumulative days within 12 months. Non-residents are taxed only on income sourced from Nigeria, such as rent, dividends, or business profits,” it stated.
The document also emphasized that holding dual citizenship does not affect an individual’s tax obligations.
How Diaspora Investments Are Treated
The committee outlined how diaspora investments in Nigeria would be handled under the new framework. Investments may be exempted, or subject to capital gains tax (CGT) or withholding tax.
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Exemptions: Government bonds, including Sukuk, remain tax-free.
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Capital Gains Tax: Applies to real estate sales (excluding owner-occupied homes). Shares are exempt up to ₦150m in proceeds or ₦10m in annual gains.
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Withholding Tax: Dividends, interest on non-government bonds, and rental income attract a 10% final tax—reduced to 7.5% for residents of countries like the UK, South Africa, and China.
Remote Work and Pension Income
On remote work and pensions, the committee clarified that only income earned in Nigeria is taxable for non-residents.
“Pensions and stipends from abroad are not taxable in Nigeria unless linked to work performed in Nigeria,” the statement added.
Remote workers will be taxed according to the laws of the country where they reside or earn income—not simply where the payment is made.
Diaspora Nigerians without income from Nigeria will not need to obtain a Tax Identification Number (TIN) or file annual tax returns.
“A TIN is unnecessary unless you earn income from employment or business activities in Nigeria,” it explained.
However, those earning taxable income in Nigeria must file returns using platforms like TaxProMax, which aim to simplify the process.
Diaspora-Owned Entities and Incentives
The committee also outlined tax guidelines for diaspora-owned organizations:
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NGOs: Exempt from tax if registered for charitable purposes and compliant with regulations.
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SMEs: Taxed like local businesses but enjoy incentives such as SME corporate tax relief.
In addition, diaspora-led investments in priority sectors like agriculture, manufacturing, and the creative industry are eligible for special incentives, including VAT exemptions on real estate and SME tax reliefs.
Transparency and Accountability
The committee assured Nigerians that the new system includes strong transparency and accountability measures. Tax revenues will be directly linked to visible infrastructure and public services, with strict checks to prevent misuse.
Chairman Taiwo Oyedele emphasized that the reforms were built to be fair, simple, and supportive of Nigerians abroad.
“Nigerians who are not tax-resident will not pay tax on foreign income, remittances, pensions, or remote work earnings unless they originate from Nigeria,” Oyedele stated.
He added that the reforms “resolve double taxation issues, align Nigeria with international standards, simplify compliance, and clearly define when and where taxes apply.”
