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The short answer
For a South African tax resident holding Nigerian shares as an ordinary investor, Nigerian dividends are foreign dividends taxed at a maximum effective rate of 20%, with no expenses deductible, according to the 2026 Budget Tax Guide and PwC. Nigeria deducts withholding tax first (10% domestic rate; the treaty caps it at 10% for portfolio holdings and 7.5% for companies holding 10% or more), and that tax can be claimed as a rebate against the South African tax, capped at the SA tax on the dividend.
Two countries, one dividend
When an NGX-listed company pays a dividend, its registrar deducts Nigerian withholding tax and pays the rest into the bank account on your file. If you are tax resident in South Africa, the dividend is also part of your worldwide income and is reported to SARS. The treaty between the two countries limits the Nigerian tax and South Africa gives credit for it.
The Nigerian deduction
| Point | What the sources say |
|---|---|
| Domestic withholding tax on dividends | 10% (PwC Nigeria, reviewed 29 May 2026) |
| Treaty rate, company owning 10% or more | 7.5% (Article 10, South Africa-Nigeria agreement) |
| Treaty rate, all other shareholders | 10% (Article 10) |
| Final in Nigeria for most individuals | Yes, according to Bamboo's June 2026 guide |
Some summaries list 7.5% for South Africa without the split; the treaty text gives 7.5% only to companies with a 10% or larger holding. An individual with a portfolio of NGX shares should expect 10%, which is the domestic rate anyway.
The South African tax
PwC's South Africa summary (reviewed 29 May 2026) says most foreign dividends are exempt if the resident holds at least 10% of the equity shares and voting rights; most others are taxed at an effective rate of 20%. The Budget 2026 Tax Guide puts it as a maximum effective rate of 20% for holdings under 10%, with no expenses deductible. The effective rate is a maximum: if your marginal income tax rate is lower, the effective rate on the dividend is lower too. A tax practitioner can work out your exact figure. This is general information, not tax advice.
The credit for Nigerian tax
PwC says South Africa allows a rebate for taxes paid on foreign income, capped so that the total credit does not exceed the share of South African tax that relates to the foreign income. Article 22 of the treaty says the same in treaty language. In practice, for a portfolio investor the Nigerian 10% reduces the South African tax on the same dividend.
Worked example
Example only: Emeka, tax resident in Durban at the top marginal rate, receives a gross Nigerian dividend of ₦500,000. The registrar deducts 10% (₦50,000) and pays ₦450,000. At an illustrative ₦85 per rand on the payment date:
- Gross dividend in rand: ₦500,000 ÷ 85 = R5,882.
- SA tax at the maximum effective 20%: R1,176.
- Nigerian tax in rand: ₦50,000 ÷ 85 = R588.
- Rebate: R588 (below the R1,176 cap).
- SA tax payable after the rebate: R1,176 − R588 = R588.
- Total tax on the dividend: R588 in Nigeria plus R588 in South Africa, 20% of the gross dividend.
If Emeka's marginal rate were lower, his South African tax before the rebate would be lower, and the credit would be capped at that lower figure.
Records to keep
- The registrar's dividend advice showing gross amount, tax deducted and net paid.
- The bank statement showing the credit and its date.
- The exchange rate you used. SARS Interpretation Note 63 allows the spot rate on the date of accrual or, by election, the average rate for the year.
- If you bring the dividend to South Africa, the SA bank confirmation; it is reported as 301 Dividends on the inward category list.
Dividend payments to a Nigerian account need a valid e-dividend mandate with your registrar; see NGX dividends for investors abroad. For buying the shares in the first place, see how to buy NGX shares from South Africa, and for the wider treaty, the South Africa-Nigeria tax agreement.
Special cases
- Scrip and bonus shares. Companies sometimes issue bonus shares instead of, or alongside, cash dividends. These raise different questions about base cost when you later sell; ask a tax practitioner how to record them.
- Unclaimed dividends. If a registrar has been holding dividends because your mandate was missing, the dividends still belong to the years they were declared. Keep the registrar's statement showing the original dates.
- Holdings through a fund. Distributions from a Nigerian unit trust are not necessarily dividends for SA tax; the fund's statement should show what kind of income each distribution is. See Nigerian mutual funds from South Africa.
- Becoming SA resident part way through a year. Only dividends received while you are resident fall under the resident rules.
If you own 10% or more of a Nigerian company, for example a family business, the picture changes: PwC says most foreign dividends on such holdings are exempt in South Africa, and the treaty rate in Nigeria is 7.5% only where the shareholder is a company. Get specific advice in that case.
Where Pryme fits
A Pryme account holds naira, dollars, pounds and euros in one place. If your registrar accepts it for e-dividends, dividends stay in naira until you choose to convert with Swap, seeing the rate and fee first. A verifiable statement gives you a clear record of each credit for your SARS return.
Questions people ask
How does SARS tax Nigerian dividends?
For holdings under 10%, at a maximum effective rate of 20%, with no expenses deductible. Holdings of 10% or more of equity and votes are mostly exempt.
How much tax does Nigeria deduct from dividends paid to someone in South Africa?
10% is the domestic rate and the treaty rate for portfolio shareholders; 7.5% applies only to companies holding 10% or more.
Can I claim Nigerian dividend tax against SARS?
Yes, as a rebate capped at the SA tax on that dividend.
What BoP code is used when I bring dividends to South Africa?
301 Dividends on the SARB inward category list.
Sources
- PwC Worldwide Tax Summaries: South Africa, individual income determination (reviewed 29 May 2026) · accessed Oct 2026
- National Treasury / SARS: Budget 2026 Tax Guide · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- SARS: South Africa-Nigeria double taxation agreement (GN 752, Gazette 31241, 22 Jul 2008) · accessed Oct 2026
- PwC Worldwide Tax Summaries: South Africa, foreign tax relief and tax treaties (reviewed 29 May 2026) · accessed Oct 2026
- Learn With Bamboo: Tax on Nigerian stocks (26 Jun 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.