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The short answer
A US person usually has to file Form 5471 for a Nigerian company once they acquire 10% or more of its stock, become an officer or director when a US person acquires 10%, control more than 50%, or are a 10% US shareholder of a company that US shareholders together own more than 50% of. The form goes with your tax return and the penalty for not filing starts at $10,000 per company per year.
If you hold shares in a Nigerian private company, perhaps a family business, a startup you co-founded or a property company, the IRS may want an information return about it every year. Form 5471 is long and the penalties are high, so it helps to know early whether you are in scope. This is information from the IRS instructions, not tax advice.
Who files: the categories
The IRS instructions for Form 5471 sort filers into categories. The ones that matter for most Nigerian company shareholders are:
| Category | Who it covers (summarised from IRS instructions) |
|---|---|
| Category 2 | A US citizen or resident who is an officer or director of a foreign corporation in which a US person has acquired 10% or more |
| Category 3 | A US person who acquires stock that brings them to 10% or more, who becomes a US person while holding 10% or more, or who disposes of stock to drop below 10% |
| Category 4 | A US person who had control (more than 50% by vote or value) of the foreign corporation during the year |
| Category 5 | A US shareholder (10% or more by vote or value, counting direct, indirect and constructive ownership) of a controlled foreign corporation |
Category 1 relates to a specific transition tax regime and is less common. A controlled foreign corporation (CFC) is one where US shareholders together own more than 50% by vote or value on any day of its tax year. Constructive ownership rules can treat shares held by certain relatives or entities as yours, so check the instructions before counting only the shares in your own name.
Three examples (illustrative)
- Kemi, 15% of a Lagos pharmacy company. Her siblings in Nigeria, who are not US persons, own the rest. She acquired the 15% this year, so Category 3 applies for this year. The company is not a CFC because US shareholders hold only 15%.
- Kemi and her US-based brother, 30% each. US shareholders now own 60%, so the company is a CFC. Both are 10% US shareholders, so Category 5 applies to both each year, with more schedules and possible annual income inclusions.
- Emeka, 5% of a Nigerian startup and a director. He is below 10%, but if another US person acquired 10% or more, Category 2 may apply to him as a US director.
When and how it is filed
Form 5471 is attached to your income tax return and is due when the return is due, including extensions. It is not filed separately like the FBAR. Each Nigerian company gets its own form. You will need the company's financial statements, translated into US terms and converted to dollars, its shareholder list and information on transactions between you and the company. Ask the company's accountant early; Nigerian year-end accounts may not be ready when your US return is due, which is one reason to extend.
Getting the figures from Nigeria
The hardest part for most filers is not the form but the information. Ask the company for its audited or management accounts for the year, its register of members, any dividends declared and paid, and any loans or payments between you and the company. Agree early which exchange rate will be used and keep a note of it. If you are a minority holder, put a right to receive this information into the shareholders' agreement, because without it you may be required to file a form you cannot complete. Where you cannot get the information despite reasonable efforts, document every request you made; a preparer can advise how the IRS treats that situation.
Penalties
The instructions set a penalty of $10,000 for each annual accounting period of each foreign corporation for failing to file or filing incomplete information. If the IRS sends notice and you still do not file within 90 days, a further $10,000 applies for each 30-day period, up to $50,000. Failure can also reduce foreign tax credits, and criminal penalties exist for wilful failures. If you have missed years, talk to a preparer before doing anything else.
How it links to other US forms
- Form 8938: the Form 8938 instructions say you do not report the asset again in detail if it is on Form 5471, but you must identify the Form 5471 and include its value in your threshold test.
- Form 8992: if the company is a CFC, US shareholders may have to report their share of its tested income each year on Form 8992, filed with the return.
- Form 8621: the PFIC rules can overlap with CFC rules; the Form 8621 instructions say a US shareholder of a CFC that is also a PFIC is generally not subject to the PFIC rules for the same stock during the qualified portion of the holding period.
On the Nigerian side, the company must keep its CAC filings current; see CAC annual returns. Before investing, read investing in a family business from the US, and for dividends, Nigerian dividends and the foreign tax credit. A fuller list of thresholds is in owning 10% of a Nigerian company.
Where Pryme fits
Form 5471 needs clean company figures. A Nigerian company running on a Pryme Business Account can generate verifiable statements through VerifyDoc.ai, which helps the accountant preparing figures for a shareholder abroad. See Business accounts and verifiable statements.
Questions people ask
Do I need to file Form 5471 if I own less than 10%?
Usually not as a shareholder, but a US officer or director can be in Category 2 when a US person acquires 10% or more. Check constructive ownership too.
Is a Nigerian company with US owners a CFC?
Only if US shareholders (each owning 10% or more) together own more than 50% by vote or value on any day of the company's tax year.
When is Form 5471 due?
With your income tax return, including extensions. It is attached to the return rather than filed separately.
What is the penalty for not filing Form 5471?
$10,000 per foreign corporation per year, plus $10,000 for each 30 days after a 90-day IRS notice, up to $50,000 more, according to the IRS instructions.
Sources
- IRS: Instructions for Form 5471 · accessed Oct 2026
- IRS: Instructions for Form 8938 (Rev. 11/2021) · accessed Oct 2026
- IRS: Instructions for Form 8992 (Rev. Dec 2024) · accessed Oct 2026
- IRS: Instructions for Form 8621 (Rev. 12/2025) · 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.