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The short answer
If you live in Nigeria and work remotely for a foreign company, you are usually paid as a contractor or through an employer of record, often in dollars, pounds or euros. As a Nigerian tax resident you are taxed in Nigeria on your worldwide income under the Nigeria Tax Act from January 2026, so you normally register for a TIN and file your own return with the Nigeria Revenue Service.
How foreign companies hire people in Nigeria
Most foreign companies do not have a Nigerian entity, so they cannot put you on a Nigerian payroll directly. They usually use one of three models.
| Model | How you are paid | What it means for you |
|---|---|---|
| Independent contractor | You invoice the company; it pays you, often in foreign currency | You handle your own tax, pension and records |
| Employer of record (EOR) | A third party employs you on the company's behalf | Payslips, possibly naira salary and local deductions |
| Contractor platform | A platform pays you after the company funds it | Platform fees and its own payout options |
Our guide on employer of record vs contractors in Africa explains the trade-offs from the employer's side, which helps when you are negotiating.
What to check in the contract
- Currency of pay. Is your rate in dollars, pounds, euros or naira? If naira, at what rate and on which date is it converted?
- Who bears transfer fees. Wire and intermediary charges can reduce what arrives. Ask for the contract to say the company pays them, or factor them into your rate.
- Payment date and method. Monthly or per invoice, by bank transfer or platform.
- Equipment, internet and power. Some companies pay an allowance; in Nigeria, a generator, inverter or solar setup is a real cost of working.
- Termination and notice. Contractors often have shorter notice periods than employees.
- Tax clause. Most contracts state that you are responsible for your own taxes in your country of residence.
Tax from January 2026
The Nigeria Tax Act came into effect in January 2026, and the Nigeria Revenue Service (NRS) replaced FIRS. Under the Act, Nigerian residents are taxable on their worldwide income regardless of where it arises. You are generally resident if, among other tests, you are domiciled in Nigeria, have a permanent place available for your domestic use here, or spend 183 days or more in Nigeria in a 12-month period.
Personal income tax is progressive. The first ₦800,000 of annual income is taxed at 0%, the next slice up to ₦3,000,000 at 15%, rising through further bands to 25% on income above ₦50,000,000. Rent relief of 20% of annual rent paid, capped at ₦500,000, replaced the old consolidated relief allowance. See Nigeria PAYE tax bands for 2026 for the full table.
Worked example: estimating tax on a dollar contract
Example only, with an invented exchange rate. Chidi earns $2,500 a month as a contractor, or $30,000 a year. At an example rate of ₦1,550 to $1, that is ₦46,500,000 for the year. He pays ₦3,000,000 a year in rent, so his rent relief is 20% of that, capped at ₦500,000. He would apply the 2026 bands to his income after reliefs and allowable deductions to estimate what he owes, and set aside that amount, in naira or in dollars, each month.
Using the exchange rate for each payment when it is received is a common approach; ask a tax adviser what applies to you. Setting aside a fixed share of every payment, for example 15% to 20%, avoids a painful bill at year end.
Managing the money once it arrives
- Receive pay in the currency of the contract where possible, so the company does not convert it for you at its rate.
- Convert into naira what you need for the month's spending, and keep the rest in the currency it arrived in if you have foreign costs ahead.
- Move your tax set-aside into a separate pot as soon as you are paid.
- Keep invoices, payment confirmations and statements together for your tax return.
For the mechanics of receiving dollars, see how freelancers in Nigeria receive dollars.
Mistakes remote workers make in the first year
- Treating gross pay as spending money. A contractor's invoice is before tax, pension and equipment costs. Budget on what is left.
- Converting everything on payday. If you have foreign costs coming, such as software, courses or travel, converting all your pay to naira and back again costs twice.
- No emergency fund. Foreign contracts can end with short notice. Several months of expenses set aside gives you time to find the next role.
- No pension. Contractors are outside the employer pension system. Our guide on pension contributions in Nigeria explains the options.
- Poor records. When the NRS asks how you arrived at your figures, invoices and statements that match make the answer simple.
Where Pryme fits
A Pryme Personal Account gives you local account details for USD, GBP and EUR as well as NGN, so a foreign employer can pay you in the currency of your contract. Money stays in that currency until you choose to convert with Swap, which shows the rate and fee first. Naira Savings Boxes can hold your tax set-aside separately; see Boxes.
Questions people ask
Do I pay tax in Nigeria if I work for a foreign company?
If you are a Nigerian tax resident, yes. From January 2026, residents are taxed on worldwide income under the Nigeria Tax Act, wherever the employer is based.
Can a US company pay me directly in Nigeria?
Yes. Most pay contractors by international transfer or through a payment platform. You need account details in the currency they pay, or they will convert for you.
What is the tax-free amount in Nigeria in 2026?
Under the Nigeria Tax Act, the first ₦800,000 of annual income is taxed at 0%. Higher slices are taxed progressively up to 25%.
Do I need a TIN to work remotely from Nigeria?
If you have taxable income you need a Tax Identification Number to file with the Nigeria Revenue Service. You cannot file a return without one.
Sources
- Nigeria tax reform acts: key changes (KPMG) · accessed Oct 2026
- How remote tech workers are taxed in Nigeria (Techpoint Africa) · 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.